Paying consistent extra payments on the principal provides singificant returns. People employ various techniques to accomplish this goal. For many people,Perhaps the easiest way to keep track is to make 1 extra payment per year. If you can't pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another very popular option is to pay half of your payment every two weeks. The result is you make one additional monthly payment in a year. Each option produces different results, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
Some borrowers can't manage any extra payments. Remember that most mortgage contracts will permit you to make additional payments to your principal at any time. Whenever you come into unexpected money, consider using this rule to pay an additional one-time payment toward principal.
Here's an example: five years after buying your home, you receive a huge tax refund,a very large legacy, or a cash gift; , you could apply a portion of this windfall toward your loan principal, which would result in enormous savings and a shortened payback period. Unless the mortgage loan is very large, even a few thousand dollars applied early can produce huge benefits over the duration of the loan.
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