Here's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars over the course of your loan: Make extra payments which go to your principal. You pay against principal in many different ways. For many people,Perhaps the simplest way to keep track is by making 1 extra mortgage payment per year. However, some folks won't be able to swing such an enormous additional payment, so dividing one extra payment into 12 extra monthly payments works too. Finally, you can commit to paying a half payment every two weeks. Each option produces slightly different results, but each will significantly reduce the length of your mortgage and lower the total interest you will pay over the life of the loan.
It may not be possible for you to pay extra every month or even every year. But it's important to note that most mortgage contracts allow you to make additional principal payments at any time. Any time you come into extra cash, you can use this provision to pay a one-time additional payment on your principal. For example: several years after buying your home, you get a larger than expected tax refund,a very large inheritance, or a cash gift; , you could pay a portion of this money toward your mortgage loan principal, resulting in significant savings and a shorter loan period. Unless the loan is quite large, even a few thousand dollars applied early in the loan period can produce huge benefits over the duration of the loan.
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