Making regular additional payments toward the principal yields singificant savings. People accomplish this goal in a few different ways. Making one extra full payment one time every year may be the easiest to track. But some folks won't be able to pull off such a large additional expense, so splitting a single additional payment into 12 extra monthly payments works as well. Another popular option is to pay half of your payment every two weeks. The effect here is that you make one extra monthly payment each year. These options differ a little in reducing the final payback amount and reducing payback length, but each will significantly shorten the length of your mortgage and lower the total interest you will pay over the life of the loan.
It may not be possible for you to pay down your principal every month or even every year. Remember that virtually all mortgages will permit you to pay extra on your principal at any point during repayment. Any time you get some extra money, consider using this rule to make an additional one-time payment toward principal.
Here's an example: a few years after moving into your home, you get a very large tax refund,a very large legacy, or a cash gift; , paying several thousand dollars into your home's principal can reduce the duration of your loan and save enormously on interest over the life of the mortgage loan. For most loans, even this small amount, paid early enough in the loan period, could offer big savings in interest and duration of the loan.
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