There's a trick to significantly reduce the length of your mortgage and save thousands over the course of your loan: Make extra payments which apply toward your principal. Borrowers pay extra in several different ways. For many people,Perhaps the simplest way to organize this process is to make 1 additional mortgage payment per year. Of course, some folks can't afford such an enormous extra expense, so dividing an additional payment into 12 additional monthly payments is a fine option too. Another option is to pay a half payment every two weeks. The result is you will make one extra monthly payment in a year. These options differ slightly in lowering the total interest paid and shortening payback length, but each will significantly reduce the duration of your mortgage and lower the total interest paid over the duration of the loan.
Some borrowers can't manage any extra payments. Keep in mind that virtually all mortgages will permit you to make additional payments to your principal at any time. You can take advantage of this rule to pay extra on your principal any time you come into extra money. Here's an example: several years after buying your home, you receive a larger than expected tax refund,a large inheritance, or a cash gift; , investing several thousand dollars into your mortgage principal can shorten the repayment period of your loan and save a huge amount on mortgage interest paid over the duration of the mortgage loan. Unless the mortgage loan is very large, even a few thousand dollars applied early can produce huge savings over the duration of the loan.
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