Here's a simple trick to significantly reduce the length of your mortgage and save thousands in interest: Make extra payments which are applied toward your loan principal. Borrowers can do this in several ways. Making one additional payment one time a year is perhaps the easiest to keep track of. 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. Each option produces different results, but each will significantly shorten the duration of your mortgage and lower the total interest you will pay over the duration of the loan.
Some people can't manage extra payments. Remember that virtually all mortgage contracts will permit you to pay extra on your principal at any point during repayment. Whenever you get some extra money, consider using this rule to pay a one-time additional payment on mortgage principal. If, for example, you receive a surprise windfall five years into your mortgage, paying a few thousand dollars into your home's principal can significantly reduce the period of your loan and save enormously on mortgage interest over the life of the mortgage loan. Unless the loan is quite large, even modest amounts applied early in the loan period can yield huge benefits over the duration of the loan.
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