Paying consistent additional payments on your loan principal can yield singificant returns. Borrowers use different methods to meet this goal. For many people,Perhaps the simplest way to keep track is to make 1 extra mortgage payment a year. Of course, many folks won't be able to pull off such a large additional payment, so splitting one extra payment into twelve additional monthly payments is a great option too. Finally, you can commit to paying half of your mortgage payment every other week. Each option produces different results, but they will all significantly reduce the duration of your mortgage and lower the total interest paid over the life of the loan.
Some folks can't manage any extra payments. Keep in mind that most mortgage contracts will permit you to pay extra on your principal at any time. You can benefit from this provision to pay down your principal any time you come into extra money.
If, for example, you were to receive a large gift or tax refund five years into your mortgage, you could apply this windfall toward your loan principal, which would result in enormous savings and a shortened loan period. Unless the loan is very large, even small amounts applied early in the loan period can produce huge benefits over the life of the loan.
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.