There's a trick to significantly reduce the length of your mortgage and save thousands of dollars in interest: Make extra payments which go toward the loan principal. Borrowers pay extra in several ways. For many people,Perhaps the simplest way to organize this process is to make 1 extra mortgage payment every year. But many folks will not be able to pull off such a large additional payment, so splitting an extra payment into twelve additional monthly payments is a fine option too. Another popular option is to pay a half payment every other week. The result is you will make one extra monthly payment in a year. Each of these options produces slightly different results, but each will significantly reduce the duration of your mortgage and lower the total interest paid over the duration of the loan.
It may not be possible for you to pay more every month or even every year. But remember that most mortgage contracts will allow you to make additional payments at any time. Whenever you come into extra money, consider using this provision to make an additional one-time payment toward your principal.
If, for example, you receive an unexpected windfall four years into your mortgage, you could apply this windfall toward your loan principal, resulting in enormous savings and a shorter payback period. Unless the mortgage loan is quite large, even modest amounts applied early in the loan period can yield huge benefits over the duration of the loan.
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