Making consistent additional payments on your principal will provide enormous savings. People make this happen in a few ways. For many people,Perhaps the easiest way to organize this process is by making one extra payment per year. However, many folks won't be able to pull off such an enormous additional payment, so dividing one additional payment into 12 additional monthly payments works too. Another popular option is to pay a half payment every two weeks. The effect here is that you make one additional monthly payment each year. Each of these options yields different results, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay extra every month or even every year. But it's important to note that most mortgages will allow you to make additional principal payments at any time. Any time you come into unexpected cash, consider using this provision to pay a one-time additional payment toward mortgage principal.
If, for example, you receive a very large gift or tax refund five years into your mortgage, investing a few thousand dollars into your mortgage principal will significantly reduce the duration of your loan and save a huge amount on interest paid over the life of the loan. For most loans, even a relatively small amount, paid early enough in the mortgage, could offer big savings in interest and in the duration 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.