Here's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars in interest: Make additional payments which apply to your principal. People employ various techniques to meet this goal. For many people,Perhaps the easiest way to organize this process is to make one extra mortgage payment a year. If you can't pay an extra whole payment in one month, you can divide your payment by 12 and write a check for that additional amount monthly. Finally, you can commit to paying a half payment every other week. These options differ slightly in lowering the total interest paid and reducing payback length, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Some borrowers can't manage any extra payments. Remember that virtually all mortgage contracts will permit you to make additional payments to your principal at any time. Any time you get some extra money, you can use this rule to make a one-time additional payment on your mortgage principal. If, for example, you receive a large gift or tax refund five years into your mortgage, you could apply a portion of this windfall toward your loan principal, which would result in huge savings and a shorter payback period. For most loans, even a relatively small amount, paid early in the mortgage, could offer huge savings in interest and in the length of the loan.
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