Paying regular additional payments on your loan principal will yield singificant returns. People use different methods to accomplish this goal. Making a single additional full payment one time per year is likely the simplest to track. However, some folks will not be able to afford this huge extra payment, so dividing one additional payment into twelve additional monthly payments is a great option too. Another very popular option is to pay a half payment every other week. The result is you make one extra monthly payment every year. These options differ a little in reducing the final payback amount and reducing payback length, but they will all significantly reduce the length of your mortgage and lower the total interest paid over the life 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 allow you to make additional payments at any time. Whenever you come into extra money, consider using this rule to make an additional one-time payment on your mortgage principal. If, for example, you were to receive a very large gift or tax refund just a few years into your mortgage, paying several thousand dollars into your home's principal can significantly shorten the period of your loan and save a huge amount on mortgage interest over the duration of the mortgage loan. For most loans, even a small amount, paid early in the loan period, could offer huge savings in interest and in the length of the loan.
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