Big Interest Savings: Available to Anyone
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 are applied to your principal. You pay extra on principal in many different ways. Making 1 extra payment one time per year may be the easiest to track. If you can't afford to pay an extra whole payment in one month, you can divide your payment by 12 and write a check for that additional amount monthly. Finally, you can commit to paying a half payment every other week. These options differ slightly in reducing the final payback amount and reducing payback length, but they will all significantly reduce the length of your mortgage and lower your total interest paid.
Additional One-time payment
It may not be possible for you to pay down your principal every month or even every year. Remember that virtually all mortgages will allow you to make additional payments to your principal at any time. You can take advantage of this rule to pay extra on your principal any time you get some extra money. If, for example, you receive a very large gift or tax refund four years into your mortgage, you could pay a portion of this money toward your mortgage loan principal, resulting in significant savings and a shortened loan period. For most loans, even a relatively small amount, paid early enough in the mortgage, could offer huge savings in interest and in the duration of the loan.