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 toward your principal. Borrowers accomplish this goal in several ways. For many people,Perhaps the simplest way to keep track is to make 1 additional payment every year. Of course, some people can't afford this huge additional payment, so dividing an extra payment into 12 extra monthly payments is a fine option too. Another option is to pay half of your payment every two weeks. The effect here is that you make one additional monthly payment every year. These options differ slightly in reducing the final payback amount and reducing payback length, but each will significantly reduce the length of your mortgage and lower the total interest paid over the duration of the loan.
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 allow you to make additional payments at any time. You can take advantage of this rule to pay extra on your mortgage principal any time you get some extra money. Here's an example: several years after buying your home, you receive a larger than expected tax refund,a very large inheritance, or a cash gift; , investing a few thousand dollars into your mortgage principal can reduce the period of your loan and save a huge amount on interest over the life of the loan. Unless the loan is quite large, even small amounts applied early can yield huge benefits over the duration of the loan.
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