Paying regular extra payments toward the principal will yield enormous savings. Borrowers use different methods to meet this goal. Paying 1 extra payment one time a year is perhaps the simplest to keep track of. Of course, some people won't be able to pull off such a large extra payment, so dividing one additional payment into twelve additional monthly payments works as well. Finally, you can commit to paying half of your mortgage payment every two weeks. These options differ slightly in reducing the total interest paid and reducing payback length, but each will significantly shorten the duration 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 more every month or even every year. But it's important to note that most mortgages will allow you to make additional payments at any time. Any time you come into extra cash, consider using this rule to pay an additional one-time payment on your mortgage principal. Here's an example: several years after moving into your home, you get a larger than expected tax refund,a large inheritance, or a cash gift; , investing a few thousand dollars into your home's principal will significantly reduce the repayment period of your loan and save enormously on interest over the duration of the loan. Unless the loan is quite large, even modest amounts applied early can produce huge benefits over the duration of the loan.
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