There's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars over the course of your loan: Make extra payments that apply toward your principal. Borrowers can do this in various ways. Paying 1 additional payment one time a year is perhaps the easiest to arrange. Of course, some people will not be able to swing this huge additional payment, so dividing a single additional payment into twelve additional monthly payments works too. Another popular option is to pay a half payment every two weeks. The result is you make one extra monthly payment every year. These options differ slightly in lowering the final payback amount and reducing payback length, but each will significantly reduce the length of your mortgage and lower the total interest paid over the life of the loan.
It may not be possible for you to pay down your principal every month or even every year. Remember that almost all mortgage contracts will allow you to pay extra on your principal at any time. Whenever you come into extra money, you can use this provision to pay an additional one-time payment toward your mortgage principal.
For example: several years after moving into your home, you get a huge tax refund,a large inheritance, or a cash gift; , you could apply a portion of this windfall toward your loan principal, which would result in huge savings and a shortened loan period. Unless the mortgage loan is quite large, even small amounts applied early can produce huge benefits over the life of the loan.
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