There'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 your loan principal. Borrowers use different methods to accomplish this goal. Paying a single extra payment once every year is probably the easiest to keep track of. If you can't pay an extra whole payment in one month, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Finally, you can pay half of your mortgage payment every other week. Each of these options produces 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. Keep in mind that almost all mortgages will allow you to make additional payments to your principal at any time. Whenever you get some unexpected money, consider using this rule to make a one-time additional payment toward your mortgage principal.
For example: several years after buying your home, you receive a very large tax refund,a very large inheritance, or a non-taxable cash gift; , you could apply this money toward your loan principal, resulting in significant savings and a shortened payback period. For most loans, even this modest amount, paid early in the mortgage, could offer huge savings in interest and duration of the loan.
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