Making consistent extra payments on your principal balance provides enormous returns. Borrowers can pay more on principal by employing various techniques. Paying 1 additional payment one time every year is perhaps the simplest to track. If you can't pay an extra whole payment in one month, you can divide that payment by 12 and pay that additional amount monthly. Finally, you can commit to paying a half payment every other week. Each option yields different results, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay down your principal every month or even every year. But you should remember that most mortgages allow you to make additional payments at any time. You can benefit from this provision to pay down your mortgage principal when you get some extra money.
If, for example, you were to receive a very large gift or tax refund four years into your mortgage, paying several thousand dollars into your home's principal will shorten the period of your loan and save a huge amount on mortgage interest paid over the duration of the mortgage loan. For most loans, even a modest amount, paid early enough in the mortgage, could offer huge savings in interest and length of the loan.
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