Extra Payments Provide Huge Mortgage Savings

Here's a simple trick to significantly reduce the length of your mortgage and save  thousands of dollars in interest: Make additional payments which apply toward your principal. Borrowers pay against principal in many different ways. For many people, perhaps the easiest way to organize this process is to make 1 extra mortgage payment per year. 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. Another  option is to pay a half payment every other week. The effect here is that you will make one additional monthly payment each year. Each of these options produces different results, but each will significantly reduce the length of your mortgage and lower your total interest paid.  

Additional one-time payment    

It may not be possible for you to pay extra every month or even every year. Keep in mind that almost all mortgages will allow you to make additional payments to your principal at any point during repayment. You can benefit from this rule to pay down your mortgage principal any time you come into extra money. 

If, for example, you were to receive a large gift or tax refund four years into your mortgage, paying several thousand dollars into your mortgage principal can reduce the repayment period of your loan and save a huge amount on interest over the life of the mortgage loan. For most loans, even a relatively modest amount, paid early enough in the loan period, could offer huge savings in interest and in the duration of the loan.

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