Here's a simple trick to significantly reduce the length of your mortgage and save thousands in interest: Make extra payments that are applied toward your principal. People pay extra in a few ways. For many people,Perhaps the easiest way to keep track is to make one additional mortgage payment a year. However, many folks will not be able to afford this huge extra payment, so splitting a single additional payment into twelve additional monthly payments is a fine option too. Finally, you can commit to paying half of your mortgage payment every other week. Each of these options produces slightly different results, but they will all significantly shorten the length of your mortgage and lower your total interest paid.
Some people just can't make extra payments. But you should remember that most mortgages will allow additional principal payments at any time. You can benefit from this rule to pay down your mortgage principal when you get some extra money.
For example: a few years after buying your home, you get a huge tax refund,a large legacy, or a cash gift; , investing several thousand dollars into your home's principal will shorten the repayment duration of your loan and save enormously on interest over the life of the loan. Unless the mortgage loan is quite large, even a few thousand dollars applied early can produce huge benefits over the duration of the loan.
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.