Paying consistent extra payments toward your loan principal will yield singificant savings. People make this happen in several ways. Paying 1 extra full payment one time a year is likely the simplest to arrange. However, some folks can't afford this huge extra expense, so splitting a single additional payment into 12 extra monthly payments is a great option too. Another popular option is to pay a half payment every other week. The result is you make one additional monthly payment in a year. These options differ slightly in reducing the total interest paid and shortening payback length, but each will significantly reduce 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 most mortgage contracts will permit you to make additional payments to your principal at any time. Whenever you get some extra cash, consider using this provision to make a one-time additional payment toward mortgage principal.
If, for example, you were to receive an unexpected windfall three years into your mortgage, paying several thousand dollars into your home's principal can reduce the repayment duration of your loan and save a huge amount on interest over the life of the loan. Unless the mortgage loan is very large, even a few thousand dollars applied early can produce huge savings over the life of the loan.
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