There's a trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make additional payments which are applied to your principal. Borrowers can accomplish this in several ways. For many people,Perhaps the easiest way to keep track is by making one additional mortgage payment per year. If you can't pay an extra whole payment all at once, you can divide your payment by 12 and write a check for that additional amount monthly. Another option is to pay half of your payment every two weeks. The effect here is that you make one extra monthly payment every year. Each of these options produces slightly different results, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.
Some borrowers just can't make any extra payments. Keep in mind that almost all mortgages will allow you to pay extra on your principal at any point during repayment. Whenever you come into extra cash, consider using this rule to make a one-time additional payment on your mortgage principal. If, for example, you receive a very large gift or tax refund five years into your mortgage, you could apply a portion of this money toward your loan principal, which would result in significant savings and a shortened loan period. Unless the loan is quite large, even a few thousand dollars applied early in the loan period can produce huge savings over the duration of the loan.
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