Here's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars in interest: Make additional payments that are applied to your principal. Borrowers employ various techniques to meet this goal. For many people,Perhaps the easiest way to keep track is to make 1 extra payment per year. But some folks will not be able to afford this huge additional expense, so splitting a single extra payment into 12 additional monthly payments works as well. Another option is to pay half of your payment every other week. The result is you make one additional monthly payment in a year. Each option produces slightly different results, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.
Some people can't manage any extra payments. Keep in mind that almost all mortgages will permit you to make additional payments to your principal at any point during repayment. You can take advantage of this rule to pay down your principal any time you come into extra money.
Here's an example: several years after buying your home, you receive a huge tax refund,a large inheritance, or a non-taxable cash gift; , paying several thousand dollars into your home's principal can reduce the duration of your loan and save enormously on interest paid over the life of the mortgage loan. Unless the loan is quite large, even a few thousand dollars applied early in the loan period can yield huge benefits over the life of the loan.
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