Making consistent extra payments toward your principal will provide enormous savings. Borrowers accomplish this goal in several ways. Making one additional payment once every year may be the simplest to arrange. But many people will not be able to pull off such a large additional payment, so dividing an extra payment into 12 extra monthly payments works as well. Another option is to pay half of your payment every other week. The result is you will make one additional monthly payment each year. Each of these options yields different results, but each will significantly reduce the duration of your mortgage and lower the total interest you will pay over the duration of the loan.
Some people just can't make extra payments. But remember that most mortgages will allow additional principal payments at any time. You can benefit from this provision to pay down your principal any time you come into extra money.
Here's an example: several years after buying your home, you receive a huge tax refund,a large legacy, or a cash gift; , you could apply a portion of this windfall toward your mortgage loan principal, resulting in enormous savings and a shortened payback period. For most loans, even a relatively small amount, paid early enough in the mortgage, could offer huge savings in interest and length of the loan.
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.