Paying consistent additional payments on your principal balance yields singificant savings. You can accomplish this using a few different techniques. For many people,Perhaps the simplest way to keep track is to make one extra mortgage payment a year. However, some people can't swing this huge additional expense, so splitting one additional payment into 12 additional monthly payments works too. Finally, you can pay a half payment every other week. These options differ slightly in reducing the total interest paid and reducing payback length, but they will all significantly shorten the length of your mortgage and lower the total interest you will pay over the duration of the loan.
Some people just can't make any extra payments. Remember that almost all mortgage contracts will permit you to make additional payments to your principal at any time. Any time you come into extra money, you can use this rule to make an additional one-time payment toward mortgage principal.
Here's an example: several years after buying your home, you receive a huge tax refund,a large inheritance, or a non-taxable cash gift; , paying a few thousand dollars into your home's principal can reduce the duration of your loan and save enormously on interest paid over the duration of the mortgage loan. For most loans, even this relatively modest amount, paid early enough in the loan period, could offer huge savings in interest and duration of the loan.
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