Paying consistent extra payments toward the principal will provide singificant savings. Borrowers accomplish this goal in a few different ways. For many people,Perhaps the simplest way to keep track is to make 1 additional mortgage payment a year. Of course, many folks won't be able to pull off this huge additional expense, so dividing one additional payment into twelve extra monthly payments works too. Finally, you can pay a half payment every other week. These options differ slightly in reducing the final payback amount and shortening payback length, but each will significantly reduce the length of your mortgage and lower the total interest paid over the duration of the loan.
It may not be possible for you to pay extra every month or even every year. But it's important to note that most mortgage contracts will allow additional payments at any time. You can benefit from this provision to pay extra on your principal when you get some extra money.
If, for example, you receive a large gift or tax refund five years into your mortgage, paying a few thousand dollars into your home's principal can shorten the duration of your loan and save a huge amount on mortgage interest paid over the duration of the loan. Unless the mortgage loan is very large, even a few thousand dollars applied early in the loan period can yield huge benefits over the life of the loan.
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