Making consistent additional payments toward the loan principal will provide singificant returns. Borrowers use different methods to accomplish this goal. Making one additional payment once per year may be the simplest to arrange. Of course, many folks can't afford this huge extra payment, so dividing one additional payment into 12 extra monthly payments is a great option too. Another very popular option is to pay half of your payment every other week. The effect here is that you will make one extra monthly payment each year. These options differ a little in lowering the final payback amount and reducing payback length, but they will all significantly shorten the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay extra every month or even every year. But remember that most mortgages allow additional payments at any time. Any time you come into unexpected money, you can use this provision to make a one-time additional payment toward your principal.
For example: a few years after moving into your home, you get a huge tax refund,a large legacy, or a non-taxable cash gift; , you could pay this windfall toward your mortgage loan principal, resulting in significant savings and a shorter loan period. For most loans, even a modest amount, paid early enough in the loan period, could offer huge savings in interest and in the duration of the loan.
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