Making regular additional payments toward your principal balance will provide enormous returns. Borrowers can do this in several ways. Making one additional full payment one time every year is perhaps the easiest to keep track of. If you can't pay an extra whole payment all at once, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Finally, you can pay half of your mortgage payment every two weeks. Each option produces different results, but each will significantly shorten the duration 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. Keep in mind that virtually all mortgage contracts will allow you to make additional payments to your principal at any time. You can take advantage of this provision to pay down your principal any time you get some extra money.
Here's an example: several years after buying your home, you get a very large tax refund,a large inheritance, or a non-taxable cash gift; , paying several thousand dollars into your home's principal will significantly shorten the repayment period of your loan and save enormously on interest paid over the duration of the loan. For most loans, even a relatively small amount, paid early enough in the loan period, could offer huge savings in interest and length of the loan.
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.