There's a simple trick to significantly reduce the length of your mortgage and save thousands over the course of your loan: Make additional payments that are applied to your principal. You pay against principal by employing various techniques. Paying one extra payment one time per year is likely the simplest to keep track of. If you can't pay an extra whole payment in one month, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another popular option is to pay a half payment every two weeks. The effect here is that you will make one extra monthly payment in a year. Each option yields different results, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.
Some folks can't manage any extra payments. But you should remember that most mortgages allow additional principal payments at any time. Any time you get some extra cash, consider using this provision to pay an additional one-time payment toward your mortgage principal.
Here's an example: five years after buying your home, you receive a very large tax refund,a very large inheritance, or a non-taxable cash gift; , you could apply this windfall toward your mortgage loan principal, which would result in huge savings and a shorter loan period. Unless the loan is quite large, even a few thousand dollars applied early in the loan period can yield huge savings over the life of the loan.
Are you looking to buy a house? Let us help you. Just fill out as much of the information below that you want and we'll get right back to you, with no obligation to you. We guarantee your privacy.