Paying consistent extra payments toward the principal will yield huge savings. Borrowers can pay extra on principal in various ways. Paying a single additional payment once every year is likely the simplest to track. If you can't pay an additional whole payment in one month, you can divide that payment by 12 and write a check for that additional amount monthly. Another popular option is to pay a half payment every two weeks. The result is you make one additional monthly payment each year. Each of these options produces different results, 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.
It may not be possible for you to pay down your principal every month or even every year. Remember that virtually all mortgages will permit you to make additional payments to your principal at any time. You can take advantage of this provision to pay down your principal any time you get some extra money.
For example: five years after buying your home, you receive a very large tax refund,a large legacy, or a cash gift; , paying several thousand dollars into your mortgage principal can significantly reduce the period of your loan and save enormously on mortgage interest over the life of the mortgage loan. Unless the mortgage loan is quite large, even modest amounts applied early can produce huge benefits 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.