Making consistent extra payments toward the loan principal provides big returns. Borrowers can pay extra on principal in various ways. For many people,Perhaps the simplest way to organize this process is by making 1 extra payment per year. Of course, some people can't swing this huge additional payment, so dividing an extra payment into twelve extra monthly payments is a fine option too. Finally, you can commit to paying half of your mortgage payment every two weeks. Each of these options produces slightly different results, but each will significantly shorten the duration of your mortgage and lower the total interest you will pay over the life of the loan.
Some folks just can't make extra payments. But you should remember that most mortgage contracts allow you to make additional payments at any time. Whenever you come into unexpected cash, you can use this provision to pay a one-time additional payment toward your principal.
Here's an example: five years after buying your home, you get a huge tax refund,a large legacy, or a cash gift; , you could apply this windfall toward your mortgage loan principal, which would result in huge savings and a shortened payback period. Unless the loan is very large, even modest amounts applied early can yield huge savings over the life of the loan.
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