There's a trick to significantly reduce the length of your mortgage and save thousands of dollars in interest: Make additional payments which apply to the loan principal. You can accomplish this in various ways. For many people,Perhaps the easiest way to organize this process is by making 1 additional mortgage payment every year. But some people will not be able to afford this huge additional expense, so dividing a single additional payment into twelve additional monthly payments works too. Finally, you can pay half of your mortgage payment every other week. These options differ slightly in lowering the total interest paid and shortening payback length, but they will all significantly shorten the length of your mortgage and lower the total interest paid over the duration of the loan.
It may not be possible for you to pay down your principal every month or even every year. Remember that virtually all mortgages will allow you to pay extra on your principal at any time. You can take advantage of this rule to pay down your principal any time you get some extra money. Here's an example: five years after buying your home, you get a larger than expected tax refund,a very large legacy, or a cash gift; , paying a few thousand dollars into your mortgage principal will significantly reduce the duration of your loan and save enormously on interest over the life of the mortgage loan. Unless the loan is quite large, even small amounts applied early in the loan period can produce huge benefits over the duration of the loan.
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