Here's a simple trick to significantly reduce the length of your mortgage and save thousands over the course of your loan: Make extra payments which are applied toward your principal. People make this happen in a few different ways. Making a single extra full payment one time a year is likely the simplest to track. But many people won't be able to swing such an enormous extra payment, so dividing an extra payment into 12 additional monthly payments is a great option too. Another popular option is to pay a half payment every other week. The result is you will make one additional monthly payment in a year. These options differ slightly in reducing the final payback amount and shortening payback length, but they will all significantly shorten the duration of your mortgage and lower the total interest you will pay over the life of the loan.
It may not be possible for you to pay extra every month or even every year. Remember that almost all mortgages will allow you to make additional payments to your principal at any time. You can benefit from this rule to pay down your principal when you get some extra money. Here's an example: five years after buying your home, you get a larger than expected tax refund,a large legacy, or a non-taxable cash gift; , you could apply a portion of this money toward your loan principal, which would result in huge savings and a shorter payback period. For most loans, even this modest amount, paid early in the mortgage, could offer huge savings in interest and length of the loan.
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