Extra Payments Yield Big Savings
There's a simple trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make additional payments which apply to your loan principal. Borrowers accomplish this goal in several different ways. For many people,Perhaps the easiest way to keep track is to make 1 additional mortgage payment per year. If you can't pay an extra whole payment in one month, you can divide that payment by 12 and pay that additional amount monthly. Finally, you can pay a half payment every other week. These options differ a little in reducing the final payback amount and shortening payback length, but they will all significantly shorten the length of your mortgage and lower the total interest you will pay over the life of the loan.
Additional One-time payment
It may not be possible for you to pay more every month or even every year. But remember that most mortgages allow additional principal payments at any time. Whenever you come into extra money, consider using this provision to make an additional one-time payment on your mortgage principal. For example: five years after buying your home, you get a very large tax refund,a very large inheritance, or a cash gift; , investing several thousand dollars into your home's principal can shorten the repayment duration of your loan and save a huge amount on interest paid over the duration of the loan. Unless the mortgage loan is quite large, even modest amounts applied early can yield huge savings over the duration of the loan.
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