Paying consistent extra payments toward the loan principal can yield huge returns. Borrowers pay extra in a few different ways. Paying a single extra full payment one time a year is probably the easiest to track. If you can't pay an extra whole payment in one month, you can divide your payment by 12 and pay that additional amount monthly. Another very popular option is to pay a half payment every other week. The result is you will make one extra monthly payment in a year. These options differ a little in reducing the final payback amount and shortening payback length, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.
Some people can't manage extra payments. Remember that almost all mortgages will permit you to pay extra on your principal at any time. You can take advantage of this provision to pay extra on your mortgage principal any time you come into extra money.
Here's an example: several years after moving into your home, you receive a larger than expected tax refund,a large inheritance, or a cash gift; , investing several thousand dollars into your home's principal will significantly reduce the duration of your loan and save enormously on mortgage interest over the duration of the mortgage loan. Unless the mortgage loan is quite large, even modest amounts applied early in the loan period can produce huge benefits over the duration of the loan.
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