Paying consistent extra payments toward the principal will yield huge returns. People use different methods to meet this goal. Paying one extra payment one time a year is perhaps the simplest to keep track of. If you can't afford to pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Another popular option is to pay half of your payment every two weeks. The effect here is that you make one extra monthly payment each year. Each option yields slightly different results, but each will significantly reduce the length of your mortgage and lower the total interest paid over the duration of the loan.
Some people just can't make extra payments. Keep in mind that almost all mortgages will allow you to make additional payments to your principal at any point during repayment. You can benefit from this rule to pay down your mortgage principal when you come into extra money.
Here's an example: a few years after buying your home, you receive a huge tax refund,a large legacy, or a non-taxable cash gift; , you could apply this money toward your loan principal, resulting in huge savings and a shorter loan period. For most loans, even a relatively small amount, paid early in the loan period, could offer huge savings in interest and in the length of the loan.
Do you have a question regarding a mortgage program?