Paying regular extra payments on the principal provides singificant returns. You can do this in several ways. For many people,Perhaps the easiest way to organize this process is by making one additional payment per year. But some folks can't afford this huge additional expense, so dividing one extra payment into 12 additional monthly payments is a fine option too. Another very popular option is to pay a half payment every two weeks. The result is you make one extra monthly payment every year. These options differ slightly in lowering the final payback amount and reducing payback length, but each will significantly shorten the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay down your principal every month or even every year. But you should remember that most mortgage contracts allow additional payments at any time. You can benefit from this rule to pay extra on your principal any time you come into extra money. Here's an example: a few years after buying your home, you get a larger than expected tax refund,a large legacy, or a cash gift; , you could apply this windfall toward your loan principal, resulting in enormous savings and a shorter payback period. For most loans, even this relatively modest amount, paid early enough in the mortgage, could offer big savings in interest and in the duration of the loan.
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