There's a trick to significantly reduce the length of your mortgage and save thousands over the course of your loan: Make extra payments that go toward your principal. You can accomplish this using a few different techniques. For many people,Perhaps the simplest way to keep track is by making 1 extra payment every year. If you can't afford to pay an extra whole payment all at once, you can divide your payment by 12 and pay that additional amount monthly. Finally, you can pay a half payment every two weeks. These options differ slightly in reducing the final payback amount and shortening payback length, but each will significantly reduce the duration of your mortgage and lower the total interest paid over the duration of the loan.
Some folks just can't make any extra payments. Keep in mind that most mortgages will permit you to make additional payments to your principal at any time. Any time you come into extra money, you can use this provision to make a one-time additional payment toward your principal.
If, for example, you receive a very large gift or tax refund three years into your mortgage, investing a few thousand dollars into your mortgage principal will significantly shorten the period of your loan and save a huge amount on mortgage interest over the life of the mortgage loan. For most loans, even a modest amount, paid early in the mortgage, could offer big savings in interest and length of the loan.
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