Here's a simple trick to significantly reduce the length of your mortgage and save thousands in interest: Make extra payments which apply toward your loan principal. Borrowers can pay extra on principal by employing various techniques. Paying 1 additional payment one time per year is likely the easiest to keep track of. If you can't pay an extra whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another very popular option is to pay a half payment every other week. The result is you will make one additional monthly payment every year. Each of these options yields different results, but each will significantly shorten the length of your mortgage and lower your total interest paid.
Some folks can't manage extra payments. Remember that almost all mortgage contracts will allow you to make additional payments to your principal at any time. You can benefit from this rule to pay extra on your principal any time you get some extra money.
If, for example, you receive a large gift or tax refund three years into your mortgage, paying several thousand dollars into your mortgage principal will significantly reduce the duration of your loan and save enormously on mortgage interest paid over the duration of the loan. Unless the mortgage loan is quite large, even a few thousand dollars applied early can produce huge savings over the duration of the loan.
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