Paying consistent extra payments on the loan principal can yield huge returns. People employ various techniques to accomplish this goal. For many people,Perhaps the easiest way to keep track is by making one additional payment a year. If you can't afford to pay an extra whole payment all at once, you can divide that payment by 12 and write a check for that additional amount monthly. Another popular option is to pay half of your payment every two weeks. The result is you make one additional monthly payment each year. Each option produces different results, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Some borrowers just can't make any extra payments. But it's important to note that most mortgages allow you to make additional principal payments at any time. Whenever you come into unexpected cash, consider using this rule to pay a one-time additional payment on your principal.
If, for example, you receive an unexpected windfall four years into your mortgage, you could apply this windfall toward your loan principal, which would result in significant savings and a shorter payback period. Unless the mortgage loan is quite large, even small amounts applied early in the loan period can produce huge benefits over the life of the loan.
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.