Extra Payments Provide Huge Mortgage Savings

There's a trick to significantly reduce the length of your mortgage and save thousands of dollars over the course of your loan: Make additional payments that apply to the loan principal. People employ various techniques to meet this goal. For many people,Perhaps the easiest way to organize this process is by making one extra mortgage payment a year. If you can't afford to pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another option is to pay half of your payment every other week. The effect here is that you make one extra monthly payment every year. Each option yields slightly different results, but they will all significantly shorten the duration of your mortgage and lower the total interest you will pay over the life of the loan.

Lump-sum Additional Payment

Some folks can't manage extra payments. But it's important to note that most mortgage contracts will allow additional principal payments at any time. You can benefit from this provision to pay extra on your mortgage principal when you come into extra money. For example: several years after buying your home, you get a larger than expected tax refund,a large legacy, or a non-taxable cash gift; , you could pay a portion of this windfall toward your mortgage loan principal, which would result in enormous savings and a shorter loan period. For most loans, even a relatively modest amount, paid early enough in the mortgage, could offer huge savings in interest and length of the loan.