Here's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars in interest: Make additional payments which apply toward the principal. Borrowers can do this using a few different techniques. For many people,Perhaps the simplest way to keep track is to make one extra mortgage payment per year. If you can't afford to pay an extra whole payment all at once, you can divide your payment by 12 and pay that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every two weeks. Each of these options yields slightly different results, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Some folks can't manage extra payments. Remember that almost all mortgages will allow you to make additional payments to your principal at any time. Whenever you come into unexpected money, you can use this rule to make an additional one-time payment toward principal.
If, for example, you were to receive a surprise windfall just a few years into your mortgage, you could pay this windfall toward your loan principal, which would result in enormous savings and a shortened loan period. Unless the loan is very large, even a few thousand dollars applied early in the loan period can produce huge benefits over the life of the loan.
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