Simple Ways to Save on Your Mortgage

Here's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars in interest: Make extra payments which apply toward your principal. You can accomplish this using a few different techniques. For many people,Perhaps the simplest way to organize this process is to make one extra payment a year. But many folks can't swing this huge additional expense, so dividing an extra payment into 12 extra monthly payments works too. Another popular option is to pay half of your payment every other week. The result is you make one additional monthly payment each year. 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.

Lump Sum Extra Payment

Some folks just can't make extra payments. Keep in mind that almost all mortgage contracts 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 when you come into extra money. If, for example, you were to receive a very large gift or tax refund three years into your mortgage, investing several thousand dollars into your home's principal can shorten the period of your loan and save enormously on mortgage interest paid over the life of the mortgage loan. For most loans, even a modest amount, paid early in the loan period, could offer big savings in interest and duration of the loan.