Here's a simple trick to reduce the repayment period of your mortgage and save you thousands over the course of your loan: Make extra payments that go to your principal. Borrowers employ various techniques to accomplish this goal. Making 1 extra payment one time a year may be the easiest to track. However, many folks won't be able to afford this huge extra payment, so splitting one extra payment into twelve additional monthly payments works as well. Another popular option is to pay half of your payment every other week. The result is you will make one extra monthly payment every year. These options differ slightly in reducing the final payback amount and shortening payback length, but each will significantly shorten the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay extra every month or even every year. Keep in mind that most mortgages will permit you to pay extra on your principal at any time. Any time you come into extra cash, you can use this rule to make an additional one-time payment on your mortgage principal. For example: a few years after buying your home, you receive a larger than expected tax refund,a large inheritance, or a non-taxable cash gift; , paying several thousand dollars into your mortgage principal can shorten the period of your loan and save a huge amount on interest paid over the life of the mortgage loan. Unless the mortgage loan is very large, even modest amounts applied early in the loan period can yield huge benefits over the duration of the loan.
Do you have a question regarding a mortgage program?