There's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars in interest: Make extra payments that go toward the loan principal. Borrowers pay more on principal by employing various techniques. For many people,Perhaps the simplest way to organize this process is to make one extra mortgage payment a year. If you can't afford to pay an extra whole payment all at once, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every two weeks. Each of these options yields different results, but they will all significantly shorten the duration 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 will allow additional payments at any time. Whenever you get some extra cash, you can use this rule to make a one-time additional payment on your principal.
If, for example, you receive an unexpected windfall four years into your mortgage, you could pay a portion of this windfall toward your mortgage loan principal, resulting in significant savings and a shortened payback period. For most loans, even a relatively small amount, paid early in the loan period, could offer huge savings in interest and in the duration of the loan.
Do you have a question regarding a mortgage program?