Making consistent additional payments toward your loan principal can yield big returns. People use different methods to accomplish this goal. Making 1 extra payment one time per year is perhaps the simplest to track. However, many folks can't afford such an enormous extra payment, so splitting an additional payment into twelve additional monthly payments works too. Another option is to pay half of your payment every other week. The result is you make one additional monthly payment every year. Each of these options produces different results, but each will significantly reduce the length of your mortgage and lower your total interest paid.
Some folks just can't make extra payments. But remember that most mortgages allow additional payments at any time. You can take advantage of this rule to pay extra on your mortgage principal any time you get some extra money.
If, for example, you were to receive a surprise windfall five years into your mortgage, paying several thousand dollars into your home's principal will reduce the period of your loan and save enormously on interest over the duration of the mortgage loan. For most loans, even this relatively modest amount, paid early enough in the mortgage, could offer huge savings in interest and duration of the loan.
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