Paying regular additional payments on the principal balance yields big returns. People pay extra in a few different ways. For many people,Perhaps the simplest way to keep track is to make one additional payment a year. Of course, many people will not be able to pull off this huge extra expense, so dividing one extra payment into twelve extra monthly payments is a fine option too. 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. Each of these options yields slightly different results, but they will all significantly shorten the duration of your mortgage and lower the total interest you will pay over the life of the loan.
Some folks can't manage extra payments. But you should remember that most mortgage contracts will allow additional payments at any time. Whenever you get some unexpected money, consider using this provision to pay an additional one-time payment on your principal. If, for example, you receive a large gift or tax refund three years into your mortgage, paying several thousand dollars into your home's principal can reduce the repayment duration of your loan and save enormously on mortgage interest over the life of the loan. Unless the mortgage loan is very large, even small amounts applied early in the loan period can yield huge savings over the life of the loan.
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