Making extra principal payments on monthly mortgage payments reduces the term of your loan. You can reduce a 30 year fixed mortgage down to about 24 years by making bimonthly payments.

Be careful though of some Bi-Weekly Mortgage Reduction Services and Programs

Many “Reduction” services and “Savings” programs charge fees just to make a bi-weekly mortgage payment for you. The attraction is the saving of a large amount of money on your mortgage and reducing the number of years you pay. The enticement is they will make payments for you.

In fact they are not actually making bi-weekly payments. They are instead making bi-weekly deductions from your bank account. These funds are actually placed into an account from which your monthly mortgage payment is made. This service only makes one additional mortgage payment combined from all bi-weekly payments. In other words, rather than making the normal 12 mortgage payments, they make 13 payments.

The inducement is they are providing a “special service” for you that would either not be possible for you to get or that you would not have the time or discipline for. In truth, you can easily make an additional mortgage payment yourself each year. An easy way to do this is to have your mortgage payment automatically deducted from your account each month with an additional portion of the payment to be applied to the principal amount. At the end of 12 monthly payments, you will have made an additional 13th payment.

This way you will not have to pay any fees for any service while reducing the terms of your original loan.

Discipline yourself to make the extra payments yourself and ensure you ask your mortgage company to apply the extra towards the principal. This way you can save money from any “fees,” and in addition, cut down the time it takes to pay off the loan in essence saving on long term mortgage interest charges!