Making regular additional payments toward your principal will provide singificant savings. Borrowers pay extra in a few ways. For many people,Perhaps the easiest way to keep track is to make one additional payment per year. Of course, many folks can't afford such an enormous extra expense, so splitting a single extra payment into 12 additional monthly payments works too. Another option is to pay a half payment every other week. The result is you make one extra monthly payment in a year. These options differ slightly in lowering the total interest paid and reducing payback length, but they will all significantly reduce the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay extra every month or even every year. Keep in mind that most mortgages will allow you to make additional payments to your principal at any time. You can benefit from this rule to pay extra on your mortgage principal when you come into extra money. If, for example, you were to receive a large gift or tax refund five years into your mortgage, you could pay this windfall toward your mortgage loan principal, resulting in significant savings and a shortened payback period. For most loans, even a small amount, paid early enough in the loan period, could offer big savings in interest and in the length of the loan.
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