Paying regular extra payments on your loan principal provides huge savings. Borrowers employ various techniques to accomplish this goal. For many people,Perhaps the easiest way to organize this process is by making 1 extra mortgage payment every year. However, some folks won't be able to swing such an enormous extra expense, so dividing a single extra payment into twelve additional monthly payments is a great option too. Another popular option is to pay half of your payment every other week. The result is you will make one extra monthly payment every year. These options differ slightly in lowering the total interest paid and reducing payback length, but each will significantly shorten the duration of your mortgage and lower the total interest paid over the life of the loan.
Some folks just can't make any extra payments. Remember that most mortgages will permit you to pay extra on your principal at any time. Whenever you get some unexpected cash, you can use this provision to pay an additional one-time payment toward principal.
If, for example, you were to receive a large gift or tax refund three years into your mortgage, you could apply a portion of this money toward your mortgage loan principal, resulting in enormous savings and a shortened payback period. For most loans, even a small amount, paid early in the mortgage, could offer big savings in interest and in the length of the loan.
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