There's a trick to significantly reduce the length of your mortgage and save you thousands of dollars over the course of your loan: Make extra payments which go to your principal. Borrowers can accomplish this using a few different techniques. For many people,Perhaps the simplest way to keep track is by making one extra mortgage payment per year. Of course, many people can't pull off such a large additional expense, so splitting an extra payment into twelve additional monthly payments is a great option too. Finally, you can pay a half payment every other week. Each of these options yields different results, but each will significantly reduce the length of your mortgage and lower your total interest paid.
Some folks can't manage extra payments. Keep in mind that most mortgage contracts will permit you to make additional payments to your principal at any point during repayment. You can benefit from this provision to pay extra on your principal when you get some extra money.
Here's an example: several years after moving into your home, you receive a huge tax refund,a large inheritance, or a non-taxable cash gift; , you could apply this windfall toward your loan principal, resulting in huge savings and a shortened loan period. For most loans, even this relatively modest amount, paid early enough in the mortgage, could offer big savings in interest and length of the loan.
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