There's a trick to significantly reduce the length of your mortgage and save thousands of dollars in interest: Make extra payments which go toward the principal. People use different methods to accomplish this goal. For many people,Perhaps the easiest way to organize this process is to make 1 extra payment a year. If you can't pay an extra whole payment all at once, you can divide that payment by 12 and pay that additional amount monthly. Another very popular option is to pay a half payment every other week. The result is you make one additional monthly payment each year. These options differ slightly in lowering the final payback amount and reducing payback length, but they will all significantly shorten the length of your mortgage and lower the total interest you will pay over the duration of the loan.
It may not be possible for you to pay down your principal every month or even every year. Keep in mind that most mortgages will permit you to pay extra on your principal at any time. Whenever you get some extra money, you can use this provision to make an additional one-time payment toward mortgage principal. Here's an example: several years after moving into your home, you get a larger than expected tax refund,a large legacy, or a non-taxable cash gift; , investing a few thousand dollars into your home's principal will significantly shorten the repayment duration of your loan and save a huge amount on mortgage interest over the duration of the mortgage loan. Unless the loan is very large, even small amounts applied early in the loan period can yield huge savings over the duration of the loan.
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.