Mortgage Savings Tips
Paying regular additional payments on the loan principal provides singificant returns. People make this happen in a few ways. For many people,Perhaps the easiest way to keep track is by making one additional payment a year. However, some folks won't be able to swing such a large additional expense, so splitting an additional payment into 12 extra monthly payments works too. Another popular option is to pay a half payment every other week. The result is you will make one extra monthly payment in a year. Each of these options yields slightly different results, but each will significantly reduce the length of your mortgage and lower your total interest paid.
One-time Additional Payment
It may not be possible for you to pay more every month or even every year. Keep in mind that virtually all mortgage contracts will allow you to make additional payments to your principal at any point during repayment. Any time you come into extra money, you can use this provision to pay a one-time additional payment toward your principal. Here's an example: several years after buying your home, you receive a very large tax refund,a large legacy, or a non-taxable cash gift; , you could apply this windfall toward your mortgage loan principal, which would result in enormous savings and a shortened payback period. Unless the mortgage loan is very large, even a few thousand dollars applied early in the loan period can produce huge savings over the duration of the loan.