There's a trick to significantly reduce the length of your mortgage and save thousands in interest: Make extra payments which go to the principal. Borrowers can do this in several ways. Making a single additional full payment one time per year is likely the easiest to keep track of. But some people won't be able to swing such an enormous extra expense, so splitting a single additional payment into twelve additional monthly payments is a great option too. Another option is to pay half of your payment every two weeks. The result is you make one extra monthly payment in a year. Each of these options yields different results, but each will significantly reduce the duration 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 most mortgage contracts will allow you to pay extra on your principal at any time. Whenever you get some unexpected money, consider using this rule to pay an additional one-time payment on principal. If, for example, you were to receive a surprise windfall five years into your mortgage, you could apply this windfall toward your mortgage loan principal, resulting in significant savings and a shortened payback period. For most loans, even a modest amount, paid early in the loan period, could offer big savings in interest and length of the loan.
Do you have a question regarding a mortgage program?