Save Big on Your Mortgage

Here's a simple trick to significantly reduce the length of your mortgage and save you thousands in interest: Make extra payments that are applied to your principal. Borrowers pay extra on principal in various ways. For many people,Perhaps the easiest way to keep track is by making 1 extra payment a year. If you can't pay an extra whole payment in one month, you can divide that payment by 12 and write a check for that additional amount monthly. Another option is to pay half of your payment every other week. The result is you will make one additional monthly payment in a year. Each option yields different results, but each will significantly reduce the length of your mortgage and lower the total interest paid over the duration of the loan.

One-time Additional Payment

It may not be possible for you to pay down your principal every month or even every year. But remember that most mortgages will allow you to make additional payments at any time. Whenever you get some unexpected cash, you can use this provision to pay a one-time additional payment on your principal.

If, for example, you were to receive a large gift or tax refund three years into your mortgage, investing a few thousand dollars into your home's principal can significantly reduce the repayment duration of your loan and save a huge amount on interest over the duration of the mortgage loan. Unless the mortgage loan is very large, even a few thousand dollars applied early in the loan period can yield huge benefits over the life of the loan.