Paying regular additional payments toward your loan principal yields big returns. Borrowers can pay extra on principal in various ways. For many people,Perhaps the easiest way to organize this process is by making one extra mortgage payment a year. But many folks will not be able to afford such a large additional payment, so splitting an extra payment into twelve additional monthly payments is a great option too. Finally, you can commit to paying a half payment every two weeks. Each of these options yields slightly different results, but each will significantly reduce the duration of your mortgage and lower the total interest paid 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 remember that most mortgages allow you to make additional payments at any time. Whenever you get some extra money, consider using this rule to make a one-time additional payment toward your mortgage principal. For example: several years after moving into your home, you receive a very large tax refund,a large legacy, or a cash gift; , investing several thousand dollars into your mortgage principal will significantly shorten the period of your loan and save a huge amount on interest paid over the life of the loan. For most loans, even this small amount, paid early in the loan period, could offer big savings in interest and length of the loan.
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