Making consistent extra payments on the principal will yield enormous savings. Borrowers accomplish this goal in several different ways. Paying a single extra full payment one time every year is probably the simplest to arrange. But many folks won't be able to afford such an enormous additional expense, so splitting a single extra payment into 12 extra monthly payments works too. Another very popular option is to pay half of your payment every two weeks. The effect here is that you will make one additional monthly payment each year. These options differ a little in reducing the total interest paid and shortening payback length, but each will 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 down your principal every month or even every year. But remember that most mortgage contracts will allow you to make additional principal payments at any time. Whenever you get some extra cash, consider using this rule to pay a one-time additional payment on principal.
Here's an example: several years after buying your home, you receive a larger than expected tax refund,a very large legacy, or a cash gift; , paying several thousand dollars into your mortgage principal can reduce the repayment duration of your loan and save a huge amount on interest over the duration of the loan. For most loans, even a relatively small amount, paid early in the loan period, could offer big savings in interest and length of the loan.
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