Paying consistent extra payments toward your loan principal will provide big savings. You pay extra on principal by employing various techniques. For many people,Perhaps the simplest way to keep track is by making 1 additional mortgage payment a year. However, some folks will not be able to swing this huge extra payment, so splitting one additional payment into 12 extra monthly payments is a fine option too. Finally, you can pay a half payment every two weeks. These options differ a little in reducing the total interest paid and shortening payback length, 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 down your principal every month or even every year. Keep in mind that most mortgage contracts will permit you to make additional payments to your principal at any time. You can take advantage of this provision to pay down your mortgage principal when you come into extra money.
If, for example, you were to receive an unexpected windfall just a few years into your mortgage, investing several thousand dollars into your home's principal will reduce the repayment period of your loan and save enormously on interest paid over the life of the mortgage loan. Unless the loan is very large, even modest amounts applied early can produce huge savings over the life of the loan.
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