There's a trick to significantly reduce the length of your mortgage and save you thousands in interest: Make extra payments that are applied to the loan principal. People employ various techniques to meet this goal. For many people,Perhaps the simplest way to keep track is to make one extra payment a year. But some people won't be able to pull off such a large extra expense, so splitting one additional payment into 12 additional monthly payments is a great option too. Another popular option is to pay half of your payment every other week. The effect here is that you make one additional monthly payment every year. These options differ a little in reducing the final payback amount and shortening payback length, but they will all significantly shorten the length of your mortgage and lower the total interest paid over the life of the loan.
Some folks just can't make any extra payments. Keep in mind that virtually all mortgage contracts will allow you to pay extra on your principal at any point during repayment. Any time you come into extra money, you can use this rule to pay a one-time additional payment toward your mortgage principal.
Here's an example: several years after buying your home, you receive a larger than expected tax refund,a large inheritance, or a non-taxable cash gift; , you could pay a portion of this money toward your mortgage loan principal, resulting in huge savings and a shorter payback period. Unless the mortgage loan is quite large, even a few thousand dollars applied early in the loan period can produce huge savings over the duration of the loan.
Do you have a question regarding a mortgage program?