There are a few strategies you can use to make extra principle payments that can save you a ton of money in interest expenses and get you mortgage-free sooner than you thought possible. Here are a few simple options you can use:
Round your monthly Payment up
The results of this simple strategy can save you a fortune and drastically reduce the length of your mortgage. As an example, if your monthly mortgage payments were $734 dollars a month, but you rounded it up to $800 month, you would save more than $48,000 in interest payments, and reduce the length of your mortgage by 7.5 years!
Make One Time Pre-Payments Using Your Income Tax Refund
This is an easy way to save money and shorten your mortgage. For example, if you have a $100,000 mortgage, and you have a $1,000 tax refund this year, you take apply that refund to your mortgage. Over time, this will save you more than $8600 and shave 1 year and 1 month off your mortgage! That’s another amazing result from a simple strategy.
Choose a 15 Year Mortgage
If you can afford it, you are far better off getting a 15 year mortgage instead of 30. It won’t cost you much more, and the interest savings are truly incredible. If you have a mortgage of $100,000 at 8% interest over 15 years, your monthly payment would be about $200 more, but you’d end up saving $92,083 in interest over the life of your mortgage! Using these strategies is the easiest way to reduce your interest expenses and shorten your mortgage period.