There's a trick to significantly reduce the length of your mortgage and save you thousands of dollars over the course of your loan: Make additional payments which go to the loan principal. You can do this in various ways. Making 1 extra payment one time per year is likely the easiest to keep track of. However, some folks can't pull off this huge additional payment, so dividing an additional payment into twelve extra monthly payments works too. Finally, you can commit to paying half of your mortgage payment every other week. Each of these options produces slightly different results, but each will significantly reduce 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. Keep in mind that almost all mortgage contracts will allow you to make additional payments to your principal at any time. Any time you get some unexpected cash, consider using this provision to make an additional one-time payment toward principal.
For example: five years after moving into your home, you get a very large tax refund,a very large legacy, or a non-taxable cash gift; , investing several thousand dollars into your home's principal can significantly shorten the duration of your loan and save enormously on mortgage interest paid over the life of the loan. Unless the loan is quite large, even modest amounts applied early can yield huge benefits over the duration of the loan.
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