Paying regular extra payments toward the principal will yield huge savings. Borrowers accomplish this goal in a few different ways. Making 1 additional payment one time every year may be the simplest to arrange. If you can't pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Finally, you can pay half of your mortgage payment every other week. These options differ slightly in reducing the final payback amount and shortening payback length, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay more every month or even every year. Keep in mind that almost all mortgages will permit you to pay extra on your principal at any time. You can benefit from this rule to pay down your mortgage principal when you get some extra money. If, for example, you were to receive a very large gift or tax refund five years into your mortgage, you could pay this money toward your mortgage loan principal, resulting in enormous savings and a shortened loan period. Unless the loan is quite large, even modest amounts applied early can yield huge benefits over the life 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.