Paying regular extra payments toward your principal balance provides singificant returns. You pay against principal by employing various techniques. For many people,Perhaps the simplest way to keep track is to make 1 additional payment per year. But many folks won't be able to afford such a large additional payment, so dividing one additional payment into twelve additional monthly payments is a great option too. Finally, you can commit to paying a half payment every other week. These options differ a little in lowering the total interest paid and shortening payback length, but they will all significantly reduce the duration 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 you should remember that most mortgages will allow you to make additional payments at any time. Whenever you come into unexpected money, consider using this provision to make a one-time additional payment on your mortgage principal. If, for example, you were to receive a large gift or tax refund four years into your mortgage, investing a few thousand dollars into your home's principal will shorten the duration of your loan and save enormously on interest paid over the life of the loan. Unless the mortgage loan is quite large, even small amounts applied early can produce huge benefits over the life of the loan.
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