Paying regular extra payments on your loan principal yields enormous savings. Borrowers can pay more on principal in many different ways. For many people,Perhaps the simplest way to keep track is to make one extra mortgage payment every year. However, some folks can't pull off this huge additional expense, so splitting one additional payment into twelve additional monthly payments works as well. Finally, you can commit to paying half of your mortgage payment every other week. Each of these options produces slightly different results, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.
Some folks just can't make extra payments. But remember that most mortgages will allow additional principal payments at any time. You can take advantage of this rule to pay extra on your mortgage principal when you get some extra money. For example: five years after buying your home, you get a huge tax refund,a large legacy, or a non-taxable cash gift; , you could apply this windfall toward your loan principal, resulting in enormous savings and a shortened loan period. For most loans, even a relatively small amount, paid early enough in the loan period, could offer big savings in interest and in the duration of the loan.
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