There's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars over the course of your loan: Make extra payments that are applied to your principal. You can accomplish this in several ways. For many people,Perhaps the easiest way to organize this process is by making 1 additional mortgage payment a year. Of course, many folks won't be able to swing such an enormous extra expense, so dividing a single extra payment into 12 additional monthly payments is a fine option too. Finally, you can pay a half payment every two weeks. These options differ slightly in lowering the final payback amount and reducing payback length, but each will significantly shorten the duration of your mortgage and lower the total interest you will pay over the duration of the loan.
Some folks can't manage extra payments. But you should remember that most mortgages will allow additional payments at any time. You can take advantage of this provision to pay down your mortgage principal when you come into extra money.
If, for example, you were to receive a large gift or tax refund four years into your mortgage, paying a few thousand dollars into your home's principal will significantly shorten the repayment duration of your loan and save enormously on mortgage interest paid over the life of the loan. For most loans, even a modest amount, paid early in the loan period, could offer huge savings in interest and in the duration of the loan.
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