A mortgage is a debt instrument, secured by the collateral of specified real estate property, that the borrower is obliged to pay back with a predetermined set of payments. Mortgages are used by individuals and businesses to make large real estate purchases without paying the entire value of the purchase up front.
Divide your payment by twelve and add that amount to each monthly payment or pay half of your payment every two weeks, also known as bi-weekly payments. You’ll make one extra payment each year, saving you $24,000 and shaving four years off your mortgage.
Extra payments add up. A $200,000 30-year home loan with an interest rate of 5% would cost $186,512 in interest with the traditional twelve payments a year. Make the equivalent of 13 monthly payments every year, and the loan will be retired in 26 years, and you will pay only $153,813 in interest — a savings of $32,699