Making regular extra payments toward your principal balance can yield huge savings. Borrowers pay more on principal by employing various techniques. Making 1 additional full payment one time every year is probably the easiest to arrange. If you can't afford to pay an extra whole payment all at once, you can divide your payment by 12 and write a check for that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every two weeks. Each option yields different results, but they will all significantly shorten the duration of your mortgage and lower the total interest you will pay over the life of the loan.
Some people can't manage any extra payments. Remember that virtually all mortgages will allow you to make additional payments to your principal at any point during repayment. Whenever you come into unexpected money, you can use this rule to make a one-time additional payment on your principal.
Here's an example: five years after moving into your home, you receive a larger than expected tax refund,a very large inheritance, or a non-taxable cash gift; , you could apply this money toward your mortgage loan principal, which would result in enormous savings and a shortened loan period. For most loans, even a modest amount, paid early in the mortgage, could offer huge savings in interest and in the length of the loan.
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