There's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars in interest: Make additional payments that are applied to the loan principal. You can accomplish this using a few different techniques. Paying 1 extra payment once every year may be the easiest to arrange. Of course, many folks can't afford such an enormous additional payment, so dividing one additional payment into 12 extra monthly payments is a fine option too. Finally, you can commit to paying a half payment every two weeks. Each option produces different results, but they will all significantly shorten 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. But remember that most mortgages allow you to make additional payments at any time. Whenever you come into extra cash, you can use this rule to pay a one-time additional payment toward your principal.
If, for example, you were to receive an unexpected windfall three years into your mortgage, paying several thousand dollars into your mortgage principal can significantly reduce the duration of your loan and save enormously on mortgage interest over the life of the mortgage loan. For most loans, even this relatively modest amount, paid early in the mortgage, could offer huge savings in interest and length of the loan.
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