Here's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars in interest: Make additional payments which are applied to your principal. People make this happen in a few different ways. For many people,Perhaps the simplest way to keep track is by making 1 additional payment every year. However, many people will not be able to pull off such an enormous extra payment, so splitting one extra payment into 12 additional monthly payments works too. Finally, you can commit to paying a half payment every two weeks. These options differ a little in reducing the final payback amount and shortening payback length, 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 more every month or even every year. Keep in mind that almost all mortgages will allow you to make additional payments to your principal at any time. Any time you come into unexpected cash, consider using this provision to make an additional one-time payment on your principal.
If, for example, you were to receive a surprise windfall four years into your mortgage, investing a few thousand dollars into your mortgage principal can shorten the duration of your loan and save a huge amount on mortgage interest over the life of the loan. Unless the loan is very large, even modest amounts applied early can yield huge savings over the life of the loan.
Are you looking to buy a house? Let us help you. Just fill out as much of the information below that you want and we'll get right back to you, with no obligation to you. We guarantee your privacy.