How to Reduce a House Loan
- 1). Ask your mortgage lender if you can apply for a loan modification. In some cases the lender agrees to reduce either the principal or interest rate on the loan to make it more affordable, which will help you pay it off more quickly. A principal deduction is an immediate reduction in the house loan debt. Keep in mind that you have to have be experiencing financial issues and write a hardship letter to get approved for a loan modification.
- 2). Pay an extra amount of money with your regular payment each month, no matter the amount. Clarify on your check or online payment that the extra funds go toward principal. When you pay extra money toward your mortgage principal you reduce the debt more aggressively and can shave months or years off of the loan length. Plug in the details of your current loan along with the amount of money you want to pay extra each month into the Bankrate mortgage calculator to calculate how quickly you can reduce the house loan by taking this action.
- 3). Make half a payment every two weeks instead of once per month as another way to reduce loan. This strategy is called a biweekly home loan strategy. When you pay in this manner you end up paying one extra month of principal payments each year, which reduces the loan more quickly. You may have to call and talk to your mortgage lender to make payments in this manner.
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