Save Big on your Mortgage

There's a trick to significantly reduce the length of your mortgage and save thousands over the course of your loan: Make extra payments which are applied to the loan principal. Borrowers can pay extra on principal in various ways. Making one additional full payment once per year is perhaps the simplest to keep track of. If you can't pay an additional whole payment in one month, you can divide your payment by 12 and pay that additional amount monthly. Finally, you can commit to paying a half payment every other week. Each of these options produces different results, but each will significantly shorten the length of your mortgage and lower your total interest paid.

Lump-sum Additional Payment

Some folks can't manage any extra payments. But you should remember that most mortgages allow additional principal payments at any time. You can benefit from this provision to pay extra on your principal any time you come into extra money. Here's an example: a few years after moving into your home, you get a very large tax refund,a large legacy, or a cash gift; , investing several thousand dollars into your home's principal can reduce the duration of your loan and save a huge amount on interest over the duration of the loan. For most loans, even this relatively small amount, paid early enough in the loan period, could offer huge savings in interest and duration of the loan.