Here's a simple trick to significantly reduce the length of your mortgage and save you thousands in interest: Make extra payments that are applied toward the loan principal. You can pay more on principal by employing various techniques. For many people,Perhaps the easiest way to organize this process is by making one extra 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 write a check for that additional amount monthly. Finally, you can pay half of your mortgage payment every other week. Each option yields different results, but each will significantly reduce the length of your mortgage and lower the total interest paid over the duration of the loan.
Some folks just can't make any extra payments. But it's important to note that most mortgages allow additional principal payments at any time. Whenever you get some unexpected cash, you can use this provision to make a one-time additional payment toward principal. Here's an example: several years after moving into your home, you receive a larger than expected tax refund,a large inheritance, or a non-taxable cash gift; , you could pay this money toward your mortgage loan principal, which would result in enormous savings and a shorter payback period. Unless the loan is quite large, even modest amounts applied early in the loan period can produce huge savings over the duration of the loan.
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