Paying regular additional payments on your loan principal yields singificant savings. People use different methods to meet this goal. For many people,Perhaps the easiest way to organize this process is by making one additional payment per year. Of course, many people won't be able to swing such a large additional expense, so splitting an additional payment into twelve additional monthly payments works as well. Another option is to pay a half payment every two weeks. The result is you make one extra monthly payment each year. These options differ a little in reducing the final payback amount and shortening payback length, but they will all significantly shorten the length of your mortgage and lower the total interest you will pay over the duration of the loan.
Some folks can't manage any extra payments. Remember that almost all mortgages will allow you to make additional payments to your principal at any time. You can take advantage of this rule to pay extra on your mortgage principal when you get some extra money. If, for example, you were to receive a surprise windfall three years into your mortgage, you could pay this windfall toward your mortgage loan principal, resulting in significant savings and a shortened loan period. Unless the mortgage loan is very large, even a few thousand dollars applied early in the loan period can yield huge savings over the life of the loan.
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.