Making consistent extra payments toward your loan principal can yield big returns. People pay extra in several different ways. For many people,Perhaps the easiest way to keep track is by making one additional payment a year. But many folks can't swing such an enormous extra payment, so splitting one extra payment into twelve additional monthly payments works too. Finally, you can pay half of your mortgage payment every two weeks. These options differ slightly in lowering the final payback amount and reducing payback length, but each will significantly reduce the duration of your mortgage and lower the total interest paid over the duration of the loan.
It may not be possible for you to pay extra every month or even every year. Keep in mind that almost all mortgage contracts will allow you to pay extra on your principal at any point during repayment. You can benefit from this rule to pay down your principal any time you come into extra money. For example: five years after buying your home, you receive a huge tax refund,a very large inheritance, or a cash gift; , investing several thousand dollars into your mortgage principal will reduce the repayment period of your loan and save a huge amount on interest over the life of the loan. For most loans, even a small amount, paid early enough in the loan period, could offer big savings in interest and in the length of the loan.
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