Making regular additional payments toward your principal balance provides big returns. You can do this using a few different techniques. For many people,Perhaps the easiest way to keep track is by making 1 extra mortgage payment a year. But many people can't swing such an enormous additional payment, so dividing a single extra payment into 12 additional monthly payments is a fine option too. Finally, you can commit to paying half of your mortgage payment every other week. Each option yields different results, but they will all significantly shorten 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 more every month or even every year. But it's important to note that most mortgages allow you to make additional payments at any time. Whenever you come into extra cash, consider using this rule to make a one-time additional payment on your mortgage principal.
Here's an example: several years after buying your home, you receive a very large tax refund,a very large inheritance, or a cash gift; , you could pay this money toward your loan principal, resulting in huge savings and a shorter payback period. For most loans, even a relatively small amount, paid early enough in the mortgage, could offer big savings in interest and length of the loan.
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