Paying consistent additional payments on the loan principal yields enormous returns. You can pay extra on principal by employing various techniques. For many people,Perhaps the easiest way to keep track is to make one additional mortgage payment every year. However, some people can't swing this huge additional payment, so splitting an additional payment into 12 extra monthly payments is a fine option too. Finally, you can commit to paying half of your mortgage payment every two weeks. These options differ slightly in lowering the total interest paid and shortening payback length, but they will all significantly reduce the length of your mortgage and lower the total interest you will pay 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 you to make additional principal payments at any time. Any time you get some extra money, consider using this rule to pay an additional one-time payment toward mortgage principal.
Here's an example: several years after buying your home, you receive a very large tax refund,a very large inheritance, or a non-taxable cash gift; , investing a few thousand dollars into your home's principal can significantly shorten the duration of your loan and save enormously on interest paid over the duration of the loan. Unless the loan is very large, even small amounts applied early in the loan period can produce huge savings over the duration of the loan.
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