Here's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars over the course of your loan: Make extra payments that go toward your principal. Borrowers pay extra in several ways. For many people,Perhaps the easiest way to organize this process is to make 1 extra payment every year. But many folks can't swing such a large additional payment, so dividing a single extra payment into twelve extra monthly payments works too. Another very popular option is to pay half of your payment every other week. The result is you make one additional monthly payment in a year. Each option produces different results, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay down your principal every month or even every year. But it's important to note that most mortgages allow you to make additional principal payments at any time. You can take advantage of this rule to pay extra on your mortgage principal any time you come into extra money. If, for example, you receive a surprise windfall five years into your mortgage, paying a few thousand dollars into your mortgage principal can significantly reduce the period of your loan and save enormously on interest paid over the life of the loan. Unless the mortgage loan is quite large, even modest amounts applied early in the loan period can produce huge benefits over the life of the loan.
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