There's a trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make extra payments which are applied toward your loan principal. Borrowers can pay against principal by employing various techniques. For many people,Perhaps the simplest way to keep track is to make 1 additional payment a year. But some folks will not be able to pull off such a large extra payment, so dividing a single extra payment into 12 additional monthly payments is a fine option too. Finally, you can pay a half payment every other week. These options differ a little in lowering the total interest paid and shortening payback length, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
Some folks just can't make any extra payments. But remember that most mortgage contracts allow you to make additional payments at any time. You can take advantage of this rule to pay extra on your principal when you get some extra money.
For example: a few years after moving into your home, you receive a very large tax refund,a very large legacy, or a cash gift; , you could apply a portion of this windfall toward your loan principal, resulting in enormous savings and a shortened loan period. For most loans, even this small amount, paid early in the loan period, could offer big savings in interest and in the length of the loan.
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