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Make an extra mortgage payment every year
Make 13 payments in 12 months. One way to pull off this tactic is to save 1/12 of a payment every month, and then make an extra payment after every 12 months. The 13 payments a year will slice years from a new 30-year mortgage, Tyson says.
Let's say you do this starting the first month after getting a 30-year mortgage for $200,000 at 4.5 percent. That would save more than $27,000 interest, and you would pay off the mortgage four years and three months earlier.
Minimum payments only
|Monthly principal and interest||$1,013.37|
|Years to pay off loan||30 years|
|Amount set aside every month||$1,345.45|
|Annual extra payment||$1,013.40|
|Years and months to pay off loan||25 years, 9 months|
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Bankrate's mortgage calculator lets you see how much time and money you save by making a lump-sum payment. Click "Show Amortization Schedule."