Making consistent extra payments toward your loan principal can yield singificant returns. Borrowers employ various techniques to accomplish this goal. For many people,Perhaps the simplest way to organize this process is by making one additional mortgage payment every year. If you can't pay an additional whole payment all at once, you can divide your payment by 12 and write a check for that additional amount monthly. Another popular option is to pay a half payment every other week. The effect here is that you will make one extra monthly payment in a year. Each of these options produces different results, but each will significantly reduce the length of your mortgage and lower the total interest you will pay over the life of the loan.
Some folks can't manage extra payments. Remember that most mortgages will allow you to make additional payments to your principal at any point during repayment. Whenever you get some extra money, consider using this provision to make an additional one-time payment toward mortgage principal.
If, for example, you were to receive a very large gift or tax refund just a few years into your mortgage, you could apply a portion of this money toward your mortgage loan principal, which would result in significant savings and a shortened payback period. Unless the loan is very large, even a few thousand dollars applied early can produce huge savings over the life of the loan.
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