Making regular extra payments toward your principal balance will provide big returns. You pay extra on principal by employing various techniques. For many people,Perhaps the simplest way to organize this process is to make one extra payment every year. If you can't pay an extra whole payment all at once, you can divide your payment by 12 and write a check for that additional amount monthly. Another very popular option is to pay half of your payment every two weeks. The effect here is that you make one extra monthly payment every year. These options differ a little in lowering the total interest paid and shortening payback length, but they will all significantly reduce the duration of your mortgage and lower the total interest paid over the duration of the loan.
Some people just can't make any extra payments. But you should remember that most mortgages will allow additional payments at any time. You can benefit from this provision to pay down your mortgage principal any time you get some extra money.
Here's an example: five years after moving into your home, you receive a larger than expected tax refund,a large inheritance, or a cash gift; , you could pay this windfall toward your mortgage loan principal, resulting in huge savings and a shorter payback period. Unless the loan is very large, even a few thousand dollars applied early in the loan period can yield huge savings over the duration of the loan.
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