Making consistent additional payments toward your loan principal can yield singificant returns. Borrowers pay extra on principal in many different ways. For many people,Perhaps the easiest way to keep track is by making 1 additional payment a year. If you can't afford to pay an extra whole payment in one month, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Finally, you can pay a half payment every other week. These options differ slightly in lowering the total interest paid and shortening payback length, but they will all significantly reduce the length of your mortgage and lower the total interest you will pay over the life of the loan.
Some folks just can't make any extra payments. But you should remember that most mortgages will allow additional payments at any time. Whenever you get some extra money, consider using this provision to make a one-time additional payment toward mortgage principal.
Here's an example: a few years after moving into your home, you receive a very large tax refund,a large inheritance, or a cash gift; , investing a few thousand dollars into your mortgage principal will significantly shorten the period of your loan and save a huge amount on interest over the life of the loan. For most loans, even a relatively modest amount, paid early in the loan period, could offer big savings in interest and in the duration of the loan.
Do you have a question regarding a mortgage program?