Here's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars in interest: Make additional payments that are applied to the principal. Borrowers employ various techniques to accomplish this goal. For many people,Perhaps the easiest way to organize this process is by making 1 additional mortgage payment a year. However, many folks won't be able to swing such a large extra payment, so splitting an extra payment into twelve extra monthly payments is a fine option too. Another very popular option is to pay half of your payment every two weeks. The result is you make one additional monthly payment in a year. Each option produces slightly different results, but they will all significantly reduce the duration of your mortgage and lower the total interest paid over the duration of the loan.
Some people can't manage extra payments. But remember that most mortgages will allow you to make additional payments at any time. Whenever you get some extra cash, consider using this provision to pay a one-time additional payment on principal.
If, for example, you receive a very large gift or tax refund five years into your mortgage, investing a few thousand dollars into your home's principal can reduce the repayment period of your loan and save enormously on interest paid over the life of the mortgage loan. Unless the loan is quite large, even small amounts applied early in the loan period can yield huge savings over the duration of the loan.
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