Making consistent extra payments toward the principal can yield enormous savings. Borrowers can accomplish this in several ways. Making a single additional payment one time per year is probably the easiest to keep track of. However, many people will not be able to afford such a large additional expense, so dividing an extra payment into twelve extra monthly payments is a great option too. Another very popular option is to pay a half payment every two weeks. The result is you will make one extra monthly payment in a year. Each of these options produces different results, but each will significantly reduce the duration of your mortgage and lower the total interest you will pay over the duration of the loan.
Some people just can't make any extra payments. But it's important to note that most mortgages will allow you to make additional payments at any time. Whenever you get some extra cash, you can use this rule to make a one-time additional payment on mortgage principal. For example: several years after buying your home, you receive a larger than expected tax refund,a very large inheritance, or a cash gift; , paying a few thousand dollars into your mortgage principal will shorten the period of your loan and save enormously on interest paid over the duration of the loan. For most loans, even this relatively modest amount, paid early enough in the loan period, could offer huge savings in interest and length of the loan.
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