Here's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars in interest: Make extra payments that are applied to your loan principal. Borrowers can accomplish this using a few different techniques. For many people,Perhaps the simplest way to organize this process is by making one additional payment per year. If you can't afford to pay an extra whole payment in one month, you can divide that payment by 12 and pay that additional amount monthly. Finally, you can pay a half payment every two weeks. These options differ slightly in reducing the total interest paid and reducing payback length, but each will significantly shorten the duration of your mortgage and lower the total interest paid over the life of the loan.
Some borrowers just can't make any extra payments. Keep in mind that almost all mortgage contracts will permit you to make additional payments to your principal at any time. You can benefit from this provision to pay extra on your principal any time you get some extra money. For example: a few years after buying your home, you receive a very large tax refund,a large inheritance, or a non-taxable cash gift; , paying several thousand dollars into your home's principal will significantly reduce the period of your loan and save a huge amount on interest over the duration of the mortgage loan. Unless the mortgage loan is very large, even small amounts applied early can produce huge benefits over the duration of the loan.
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