There's a simple trick to significantly reduce the length of your mortgage and save you thousands in interest: Make additional payments that are applied toward the principal. Borrowers use different methods to meet this goal. For many people,Perhaps the easiest way to organize this process is to make 1 extra payment every year. Of course, many people can't afford this huge additional payment, so dividing a single additional payment into twelve extra monthly payments works as well. Another option is to pay half of your payment every other week. The effect here is that you will make one additional monthly payment every year. These options differ slightly in reducing the final payback amount and reducing payback length, but they will all significantly shorten 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. But remember that most mortgages allow you to make additional payments at any time. Any time you get some extra money, you can use this rule to pay an additional one-time payment on your mortgage principal.
If, for example, you receive an unexpected windfall four years into your mortgage, paying several thousand dollars into your mortgage principal will significantly reduce the period of your loan and save enormously on interest paid over the duration of the loan. For most loans, even a modest amount, paid early in the mortgage, could offer big savings in interest and in the duration of the loan.
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