Paying regular additional payments toward the loan principal yields big returns. People make this happen in several ways. Making a single additional full payment once per year may be the simplest to track. But many folks will not be able to pull off such a large extra expense, so splitting a single extra payment into twelve additional monthly payments is a great option too. Finally, you can pay a half payment every two weeks. Each option produces different results, but each will significantly reduce the length of your mortgage and lower the total interest paid over the life of the loan.
Some borrowers can't manage any extra payments. Remember that almost all mortgages will allow you to make additional payments to your principal at any time. Whenever you get some extra money, you can use this rule to pay a one-time additional payment on your principal.
For example: five years after buying your home, you receive a larger than expected tax refund,a very large inheritance, or a cash gift; , paying several thousand dollars into your home's principal will significantly shorten the period of your loan and save a huge amount on mortgage interest over the life of the mortgage loan. Unless the loan is quite large, even small amounts applied early can yield huge benefits over the duration 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.