Here's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars in interest: Make additional payments which go toward the loan principal. Borrowers can accomplish this in various ways. Paying one extra payment once every year is probably the easiest to arrange. However, many folks will not be able to pull off this huge extra expense, so splitting one extra payment into twelve additional monthly payments is a great option too. Finally, you can commit to paying half of your mortgage payment every two weeks. Each option yields different results, but they will all significantly shorten the length of your mortgage and lower the total interest paid over the duration of the loan.
It may not be possible for you to pay down your principal every month or even every year. But it's important to note that most mortgages allow you to make additional principal payments at any time. You can benefit from this rule to pay extra on your principal when you get some extra money. Here's an example: several years after moving into your home, you receive a very large tax refund,a large inheritance, or a cash gift; , you could pay this windfall toward your loan principal, resulting in enormous savings and a shortened payback period. Unless the loan is very large, even modest amounts applied early in the loan period can yield huge benefits over the duration of the loan.
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