Making regular extra payments toward your principal balance will yield huge returns. Borrowers employ various techniques to meet this goal. Making one additional payment one time per year is probably the easiest to track. But some folks will not be able to afford such an enormous extra expense, so dividing one extra payment into twelve additional monthly payments works too. Finally, you can pay a half payment every other week. Each option yields slightly different results, but they will all significantly shorten the length of your mortgage and lower the total interest you will pay over the life of the loan.
It may not be possible for you to pay down your principal every month or even every year. Remember that virtually all mortgage contracts will permit you to make additional payments to your principal at any time. Whenever you get some unexpected money, consider using this rule to pay an additional one-time payment on principal. If, for example, you were to receive a surprise windfall four years into your mortgage, you could pay a portion of this money toward your mortgage loan principal, resulting in enormous savings and a shortened payback period. For most loans, even this relatively small amount, paid early in the mortgage, could offer big savings in interest and in the length of the loan.
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