There's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars over the course of your loan: Make additional payments that are applied toward your loan principal. People pay extra in a few different ways. For many people,Perhaps the easiest way to organize this process is by making 1 extra payment per year. But some people can't swing this huge additional expense, so splitting an extra payment into twelve additional monthly payments works as well. Another very popular option is to pay a half payment every two weeks. The result is you will make one extra monthly payment in a year. These options differ slightly in lowering the final payback amount and reducing payback length, but each will significantly reduce the duration of your mortgage and lower the total interest paid over the life of the loan.
It may not be possible for you to pay extra every month or even every year. But you should remember that most mortgages will allow you to make additional principal payments at any time. You can take advantage of this rule to pay extra on your mortgage principal any time you come into extra money.
Here's an example: five years after buying your home, you get a larger than expected tax refund,a large inheritance, or a cash gift; , investing a few thousand dollars into your mortgage principal can shorten the duration of your loan and save a huge amount on interest paid over the duration of the loan. Unless the mortgage loan is quite large, even a few thousand dollars applied early can produce huge savings over the duration of the loan.
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