There's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars in interest: Make extra payments that apply toward your principal. People use different methods to meet this goal. Paying one extra full payment one time per year may be the simplest to keep track of. If you can't pay an extra whole payment all at once, you can divide your payment by 12 and pay that additional amount monthly. Another popular option is to pay half of your payment every two weeks. The result is you will make one extra monthly payment every year. Each of these options produces slightly different results, but they will all significantly shorten the duration of your mortgage and lower the total interest you will pay over the duration of the loan.
Additional One-time payment
It may not be possible for you to pay extra every month or even every year. But you should remember that most mortgages will allow you to make additional payments at any time. You can take advantage of this rule to pay down your principal any time you get some extra money.
If, for example, you receive a surprise windfall four years into your mortgage, paying several thousand dollars into your mortgage principal can significantly shorten the duration of your loan and save a huge amount on mortgage interest paid over the duration of the loan. Unless the mortgage loan is quite large, even a few thousand dollars applied early in the loan period can yield huge savings over the life of the loan.
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