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. You can pay extra on principal in many different ways. For many people,Perhaps the easiest way to keep track is to make one additional mortgage payment per year. Of course, some people won't be able to swing such an enormous additional payment, so dividing an additional payment into 12 additional monthly payments is a fine option too. Another very popular option is to pay half of your payment every other week. The result is you make one extra monthly payment in a year. Each option yields different results, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay extra every month or even every year. Remember that virtually all mortgage contracts will allow you to make additional payments to your principal at any point during repayment. You can take advantage of this provision to pay extra on your mortgage principal when you get some extra money. If, for example, you were to receive a large gift or tax refund five years into your mortgage, investing several thousand dollars into your mortgage principal can reduce the repayment duration of your loan and save enormously on interest over the life of the mortgage loan. Unless the loan is very large, even modest amounts applied early in the loan period can yield huge savings over the duration of the loan.
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