Simple Ways to Save on Your Mortgage
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There’s a trick to significantly reduce the length of your mortgage and save thousands of dollars over the course of your loan: Make extra payments which are applied toward your loan principal. Borrowers can pay more on principal in many different ways. Making 1 additional full payment once a year is perhaps the easiest to track. If you can’t afford to pay an extra 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 two weeks. Each of these options produces different results, but each will significantly reduce the length of your mortgage and lower the total interest you will pay over the duration of the loan.
Additional One-time payment
Some folks just can’t make extra payments. But you should remember that most mortgages will allow additional payments at any time. Whenever you get some extra cash, you can use this rule to pay an additional one-time payment toward mortgage principal.
For example: a few years after moving into your home, you receive a very large tax refund, a large inheritance, or a non-taxable cash gift; , you could apply this windfall toward your mortgage loan principal, resulting in significant savings and a shorter payback period. Unless the loan is quite large, even a few thousand dollars applied early can produce huge savings over the duration of the loan.