Here's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars in interest: Make additional payments which are applied to the loan principal. You pay against principal by employing various techniques. For many people,Perhaps the easiest way to organize this process is by making 1 additional payment per year. If you can't pay an additional whole payment in one month, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Another popular option is to pay half of your payment every other week. The result is you will make one extra monthly payment every year. These options differ slightly in lowering the final payback amount and reducing payback length, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.
Lump-sum Additional Payment
Some people just can't make any extra payments. Keep in mind that almost all mortgage contracts will allow you to pay extra on your principal at any time. Whenever you come into extra money, consider using this rule to pay an additional one-time payment on mortgage principal. For example: five years after buying your home, you receive a huge tax refund,a large legacy, or a non-taxable cash gift; , investing a few thousand dollars into your home's principal will shorten the repayment duration of your loan and save a huge amount on mortgage interest over the life of the loan. Unless the loan is very large, even small amounts applied early can produce huge benefits over the duration of the loan.
Smith-Craine Real Estate Financing can walk you the mortgage process. Give us a call at (415) 406-2330.