Paying consistent extra payments on the principal can yield enormous returns. People accomplish this goal in a few ways. Paying a single additional full payment one time per year is probably the easiest to track. However, many people can't afford this huge additional expense, so splitting a single additional payment into twelve extra monthly payments works too. Finally, you can commit to paying half of your mortgage payment every two weeks. Each of these options yields different results, but each will significantly shorten the length of your mortgage and lower the total interest you will pay over the duration of the loan.
Some borrowers just can't make any extra payments. But it's important to note that most mortgages allow you to make additional principal payments at any time. Any time you come into extra cash, consider using this rule to pay an additional one-time payment on principal. Here's an example: a few years after moving into your home, you get a larger than expected tax refund,a large legacy, or a non-taxable cash gift; , you could pay a portion of this windfall toward your mortgage loan principal, which would result in enormous savings and a shortened loan period. For most loans, even this relatively modest amount, paid early enough in the loan period, could offer huge savings in interest and duration of the loan.
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