Mortgage Saving Tips

Here's a simple trick to significantly reduce the length of your mortgage and save thousands in interest: Make extra payments which go toward your principal. Borrowers make this happen in several ways. For many people,Perhaps the simplest way to organize this process is to make 1 additional mortgage payment a year. Of course, many folks won't be able to pull off such an enormous extra payment, so dividing one additional payment into twelve extra monthly payments is a great option too. Finally, you can pay a half payment every other week. Each option produces different results, but each will significantly reduce the length of your mortgage and lower the total interest you will pay over the life of the loan.

Lump Sum Extra Payment

It may not be possible for you to pay extra every month or even every year. But you should remember that most mortgage contracts allow additional principal payments at any time. Any time you come into extra cash, you can use this provision to pay an additional one-time payment on mortgage principal.

For example: five years after buying your home, you receive a very large tax refund,a large inheritance, or a non-taxable cash gift; , you could apply a portion of this windfall toward your mortgage loan principal, which would result in enormous savings and a shortened loan period. Unless the loan is very large, even a few thousand dollars applied early in the loan period can produce huge savings over the duration of the loan.