Paying consistent extra payments on the loan principal yields enormous savings. Borrowers employ various techniques to meet this goal. For many people,Perhaps the easiest way to keep track is by making 1 extra mortgage payment per year. If you can't pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another option is to pay a half payment every two weeks. The result is you make one additional monthly payment every year. These options differ a little in lowering the total interest paid and shortening payback length, but they will all significantly reduce the duration of your mortgage and lower the total interest paid over the life of the loan.
It may not be possible for you to pay more every month or even every year. Remember that almost all mortgage contracts will permit you to make additional payments to your principal at any time. Whenever you get some unexpected money, consider using this rule to make an additional one-time payment on mortgage principal.
For example: five years after buying your home, you get a huge tax refund,a very large legacy, or a cash gift; , paying several thousand dollars into your mortgage principal will reduce the period of your loan and save enormously on interest paid over the duration of the mortgage loan. Unless the mortgage loan is quite large, even a few thousand dollars applied early in the loan period can produce huge benefits over the duration of the loan.
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.