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 the loan principal. Borrowers pay extra in a few ways. For many people,Perhaps the simplest way to keep track is to make 1 additional payment a year. Of course, many people will not be able to afford this huge extra payment, so dividing one additional payment into 12 extra monthly payments works as well. Another option is to pay half of your payment every two weeks. The result is you make one additional monthly payment each year. Each of these options produces slightly different results, but they will all significantly shorten the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay more every month or even every year. But it's important to note that most mortgage contracts will allow you to make additional payments at any time. Whenever you get some extra cash, you can use this rule to pay an additional one-time payment toward principal. For example: five years after moving into your home, you get a larger than expected tax refund,a large inheritance, or a cash gift; , you could pay this money toward your loan principal, which would result in enormous savings and a shortened payback period. For most loans, even this relatively modest amount, paid early in the mortgage, could offer huge savings in interest and in the duration of the loan.
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