Making regular additional payments toward the loan principal yields big returns. Borrowers employ various techniques to meet this goal. For many people,Perhaps the simplest way to organize this process is by making 1 extra mortgage payment a year. However, many folks can't swing such a large extra payment, so dividing a single additional payment into 12 extra monthly payments is a great option too. Another option is to pay half of your payment every other week. The effect here is that you make one additional monthly payment every year. Each of these options produces slightly different results, but each will significantly shorten the length of your mortgage and lower the total interest you will pay over the life of the loan.
It may not be possible for you to pay more every month or even every year. But remember that most mortgage contracts allow additional principal payments at any time. You can take advantage of this rule to pay down your mortgage principal any time you come into extra money. If, for example, you receive a very large gift or tax refund just a few years into your mortgage, investing several thousand dollars into your mortgage principal can significantly reduce the repayment period of your loan and save a huge amount on interest paid over the duration of the loan. Unless the loan is very large, even a few thousand dollars applied early in the loan period can produce huge benefits over the duration of the loan.
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