Paying consistent extra payments toward your loan principal can yield big savings. Borrowers use different methods to accomplish this goal. Paying a single additional full payment once per year is probably the simplest to track. But many people can't swing such a large extra expense, so dividing a single extra payment into twelve additional monthly payments works too. Finally, you can pay half of your mortgage payment every two weeks. Each option yields different results, but they will all significantly shorten the length of your mortgage and lower the total interest you will pay over the life of the loan.
It may not be possible for you to pay down your principal every month or even every year. But it's important to note that most mortgage contracts allow additional payments at any time. You can take advantage of this rule to pay down your mortgage principal when you come into extra money.
Here's an example: five years after moving into your home, you get a larger than expected tax refund,a large legacy, or a cash gift; , paying several thousand dollars into your home's principal will reduce the repayment period of your loan and save enormously on interest over the duration of the mortgage loan. Unless the mortgage loan is quite large, even modest amounts applied early can produce huge benefits over the life of the loan.
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