Simple Ways to 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 apply to your loan principal. People make this happen in a few different ways. Paying one extra payment one time a year is probably the easiest to keep track of. If you can't afford to pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every other week. These options differ slightly in reducing the total interest paid and shortening payback length, but each will significantly shorten the length of your mortgage and lower the total interest you will pay over the duration of the loan.
Lump-sum Additional Payment
It may not be possible for you to pay more every month or even every year. But you should remember that most mortgages allow additional principal payments at any time. You can take advantage of this rule to pay down your mortgage principal when you get some extra money. If, for example, you receive a surprise windfall three years into your mortgage, paying a few thousand dollars into your mortgage principal will significantly shorten the duration of your loan and save a huge amount on interest paid over the duration of the mortgage loan. Unless the mortgage loan is quite large, even a few thousand dollars applied early can yield huge savings over the duration of the loan.