Save on your Mortgage

There's a trick to significantly reduce the length of your mortgage and save thousands in interest: Make extra payments that apply to the principal. Borrowers use different methods to accomplish this goal. Making a single additional payment once every year may be the easiest to keep track of. However, some folks will not be able to pull off such a large extra payment, so splitting an additional payment into twelve additional monthly payments is a fine option too. Finally, you can commit to paying a half payment every other week. These options differ a little in lowering the final payback amount and shortening payback length, but each will significantly shorten the duration of your mortgage and lower the total interest paid over the life of the loan.

Lump Sum Extra Payment

Some borrowers just can't make any extra payments. But it's important to note that most mortgage contracts will allow additional payments at any time. Whenever you get some unexpected money, you can use this provision to pay an additional one-time payment toward principal.

For example: several years after buying your home, you get a huge tax refund,a large inheritance, or a non-taxable cash gift; , you could apply this money toward your mortgage loan principal, which would result in huge savings and a shortened loan period. For most loans, even this small amount, paid early enough in the loan period, could offer big savings in interest and in the duration of the loan.