Here's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars in interest: Make extra payments that apply to the loan principal. People make this happen in a few ways. For many people,Perhaps the easiest way to keep track is by making 1 extra payment per year. Of course, many folks will not be able to afford this huge extra expense, so splitting a single additional payment into 12 additional monthly payments is a fine option too. Finally, you can pay half of your mortgage payment every two weeks. Each of these options produces slightly different results, but they will all significantly reduce the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay extra every month or even every year. But remember that most mortgages allow you to make additional payments at any time. You can benefit from this rule to pay extra on your principal when you get some extra money. For example: a few years after moving into your home, you get a very large tax refund,a large legacy, or a non-taxable cash gift; , you could pay a portion of this money toward your loan principal, resulting in huge savings and a shorter payback period. For most loans, even this modest amount, paid early in the mortgage, could offer big savings in interest and length of the loan.
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