Making regular extra payments on the loan principal can yield enormous savings. People pay extra in several ways. Paying a single additional full payment once per year is probably the simplest to track. Of course, some people can't swing this huge extra payment, so dividing a single additional payment into twelve additional monthly payments is a great option too. Finally, you can pay a half payment every other week. Each of these options produces slightly different results, but each will significantly reduce the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay extra every month or even every year. Keep in mind that virtually all mortgages will permit you to make additional payments to your principal at any time. You can take advantage of this rule to pay down your principal any time you get some extra money. If, for example, you receive a large gift or tax refund five years into your mortgage, paying a few thousand dollars into your home's principal can significantly reduce the repayment period of your loan and save a huge amount on interest over the life of the mortgage loan. For most loans, even this modest amount, paid early enough in the loan period, could offer huge savings in interest and in the length of the loan.
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