Making regular additional payments toward your principal provides singificant savings. Borrowers can pay against principal in many different ways. For many people,Perhaps the easiest way to organize this process is by making one extra mortgage payment every year. Of course, many folks won't be able to afford such an enormous additional payment, so dividing an additional payment into 12 additional monthly payments is a fine option too. Another option is to pay a half payment every two weeks. The effect here is that you will make one additional monthly payment each year. Each of these options yields different results, but each will significantly reduce the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay down your principal every month or even every year. But you should remember that most mortgages allow additional payments at any time. Whenever you come into extra money, consider using this rule to make an additional one-time payment toward your principal.
For example: a few years after buying your home, you get a huge tax refund,a large legacy, or a non-taxable cash gift; , investing several thousand dollars into your home's principal can shorten the period of your loan and save enormously on interest over the life of the mortgage loan. For most loans, even a modest amount, paid early enough in the mortgage, could offer huge savings in interest and duration of the loan.
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