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 apply toward your principal. You can accomplish this in various ways. Paying a single extra full payment once every year is probably the simplest to arrange. If you can't pay an additional whole payment in one month, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Finally, you can pay half of your mortgage payment every other week. Each of these options yields different results, but each will significantly shorten the duration of your mortgage and lower the total interest paid over the life of the loan.
Some folks can't manage any extra payments. But remember that most mortgage contracts will allow additional payments at any time. You can benefit from this provision to pay extra on your principal when you get some extra money. Here's an example: a few years after buying your home, you receive a huge tax refund,a large inheritance, or a non-taxable cash gift; , investing a few thousand dollars into your home's principal can significantly shorten the period of your loan and save a huge amount on mortgage interest paid over the life of the loan. Unless the mortgage loan is quite large, even small amounts applied early in the loan period can produce huge benefits over the life of the loan.
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