Here's a simple trick to significantly reduce the length of your mortgage and save thousands over the course of your loan: Make extra payments that go toward the principal. Borrowers use different methods to accomplish this goal. For many people,Perhaps the easiest way to keep track is to make 1 additional payment per year. However, many people won't be able to pull off such an enormous additional payment, so splitting an additional payment into 12 extra monthly payments is a fine option too. Finally, you can pay half of your mortgage payment every other week. These options differ slightly in reducing the total interest paid and reducing payback length, but each will significantly reduce 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. Remember that most mortgages will permit you to pay extra on your principal at any point during repayment. Any time you come into unexpected cash, you can use this rule to make an additional one-time payment toward mortgage principal. Here's an example: a few years after buying your home, you receive a huge tax refund,a large inheritance, or a cash gift; , you could pay a portion of this windfall toward your loan principal, resulting in significant savings and a shortened loan period. For most loans, even this relatively small amount, paid early in the mortgage, could offer big savings in interest and length of the loan.
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