Save on your Mortgage Loan
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. You pay against principal by employing various techniques. For many people,Perhaps the easiest way to keep track is by making one additional payment per year. However, many folks will not be able to afford such a large additional expense, so splitting one additional payment into twelve extra monthly payments works too. Finally, you can commit to paying half of your mortgage payment every other week. Each of these options yields slightly different results, but they will all significantly reduce the length of your mortgage and lower the total interest paid over the duration of the loan.
Lump Sum Extra Payment
Some folks can't manage extra payments. But it's important to note that most mortgages will allow you to make additional payments at any time. You can benefit from this rule to pay extra on your mortgage principal when you get some extra money.
If, for example, you were to receive a very large gift or tax refund four years into your mortgage, investing a few thousand dollars into your mortgage principal can significantly reduce the period of your loan and save enormously on mortgage interest over the duration of the mortgage loan. For most loans, even this modest amount, paid early enough in the loan period, could offer big savings in interest and duration of the loan.