Paying regular extra payments toward your principal balance yields enormous returns. You can accomplish this using a few different techniques. Making one extra payment one time per year is probably the easiest to track. But many folks can't swing such a large extra payment, so splitting a single extra payment into twelve extra monthly payments works as well. Another option is to pay a half payment every two weeks. The effect here is that you will make one additional monthly payment each year. Each option yields different results, but they will all significantly shorten the length of your mortgage and lower your total interest paid.
Some borrowers just can't make any extra payments. Remember that most mortgage contracts will permit you to make additional payments to your principal at any time. You can benefit from this rule to pay down your principal when you get some extra money. Here's an example: several years after buying your home, you get a huge tax refund,a very large legacy, or a cash gift; , investing a few thousand dollars into your home's principal can significantly shorten the repayment period of your loan and save enormously on mortgage interest over the life of the loan. Unless the loan is quite large, even a few thousand dollars applied early in the loan period can yield huge benefits over the duration of the loan.
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