Extra Payments Provide Huge Mortgage Savings

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 go toward the loan principal. You pay more on principal in many different ways. Paying one additional full payment once a year may be the simplest to keep track of. If you can't pay an extra whole payment all at once, you can divide that payment by 12 and pay that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every two weeks. Each option yields different results, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.

One-time Additional Payment

It may not be possible for you to pay extra every month or even every year. But remember that most mortgages allow additional principal payments at any time. You can benefit from this provision to pay down your principal any time you get some extra money. Here's an example: a few years after buying your home, you receive a huge tax refund,a very large legacy, or a non-taxable cash gift; , you could pay a portion of this money toward your loan principal, which would result in enormous savings and a shortened payback period. Unless the loan is very large, even small amounts applied early can produce huge benefits over the life of the loan.

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