Here'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 go to your principal. People accomplish this goal in a few different ways. Making a single extra payment one time a year is perhaps the easiest to track. Of course, many people can't swing such an enormous extra payment, so dividing an extra payment into twelve additional monthly payments is a great option too. Another 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 reducing the final payback amount and shortening payback length, but each will significantly shorten the length of your mortgage and lower the total interest paid over the life of the loan.
Some folks just can't make extra payments. Remember that most mortgages will permit you to pay extra on your principal at any time. You can take advantage of this provision to pay down your principal any time you get some extra money. For example: five years after buying your home, you get a very large tax refund,a large inheritance, or a cash gift; , investing a few thousand dollars into your home's principal can significantly reduce the repayment duration of your loan and save a huge amount on interest paid over the life of the mortgage loan. Unless the loan is very large, even modest amounts applied early can yield huge benefits over the duration of the loan.
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