Making consistent additional payments on your principal balance provides singificant savings. You can accomplish this using a few different techniques. For many people,Perhaps the simplest way to organize this process is by making one additional mortgage payment a year. Of course, some folks can't afford such an enormous additional expense, so dividing a single additional payment into 12 extra monthly payments works too. Another popular option is to pay half of your payment every two weeks. The effect here is that you make one extra monthly payment each year. These options differ a little in lowering the total interest paid and reducing payback length, but each will significantly shorten the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay extra every month or even every year. Remember that most mortgages will permit you to pay extra on your principal at any time. Whenever you come into unexpected cash, you can use this rule to pay a one-time additional payment on mortgage principal.
Here's an example: a few years after buying your home, you get a larger than expected tax refund,a large legacy, or a cash gift; , investing a few thousand dollars into your mortgage principal will significantly shorten the duration of your loan and save enormously on interest paid over the life of the loan. For most loans, even a modest amount, paid early enough in the loan period, could offer huge savings in interest and in the duration of the loan.
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