Simple Ways to Save on Your Mortgage
There's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars in interest: Make extra payments that go to your principal. People use different methods to accomplish this goal. Paying a single additional payment one time a year is likely the easiest to keep track of. If you can't pay an additional whole payment in one month, you can divide your payment by 12 and write a check for that additional amount monthly. Another very popular option is to pay a half payment every two weeks. The result is you will make one additional monthly payment in a year. These options differ slightly in reducing the total interest paid and reducing payback length, but each will significantly shorten the duration of your mortgage and lower the total interest paid over the duration of the loan.
Lump Sum Extra Payment
Some people can't manage any extra payments. Remember that almost all mortgages will permit you to pay extra on your principal at any point during repayment. You can benefit from this provision to pay extra on your principal any time you get some extra money. If, for example, you receive a large gift or tax refund three years into your mortgage, investing several thousand dollars into your home's principal can significantly reduce the duration of your loan and save a huge amount on mortgage interest paid over the duration of the loan. Unless the loan is quite large, even modest amounts applied early can produce huge benefits over the duration of the loan.