Here's a simple trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make additional payments that are applied to your principal. Borrowers can do this in various ways. For many people,Perhaps the easiest way to organize this process is by making one additional payment a year. Of course, some folks can't afford such an enormous additional expense, so splitting an additional payment into 12 additional monthly payments is a great option too. Another popular option is to pay half of your payment every two weeks. The result is you will make one extra monthly payment each year. These options differ slightly in lowering the total interest paid and reducing payback length, but they will all significantly shorten the length of your mortgage and lower your total interest paid.
Some borrowers can't manage any extra payments. Remember that virtually all mortgage contracts will permit you to pay extra on your principal at any point during repayment. You can benefit from this rule to pay down your principal when you get some extra money. If, for example, you receive a very large gift or tax refund four years into your mortgage, you could pay this money toward your loan principal, which would result in significant savings and a shorter payback period. For most loans, even this small amount, paid early enough in the mortgage, could offer huge savings in interest and length of the loan.
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