There's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars in interest: Make extra payments that are applied toward the principal. You can pay extra on principal in various ways. For many people,Perhaps the easiest way to keep track is by making 1 extra mortgage payment every year. However, some folks will not be able to pull off such an enormous extra payment, so dividing one additional payment into 12 extra monthly payments is a great option too. Another option is to pay a half payment every two weeks. The effect here is that you make one extra monthly payment every year. Each of these options yields 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.
One-time Additional Payment
It may not be possible for you to pay extra every month or even every year. But remember that most mortgages will allow you to make additional principal payments at any time. You can benefit from this rule to pay down your mortgage principal when you get some extra money.
If, for example, you receive a surprise windfall four years into your mortgage, you could pay a portion of this money toward your loan principal, which would result in significant savings and a shortened loan period. For most loans, even this relatively small amount, paid early enough in the mortgage, could offer big savings in interest and in the duration of the loan.
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