Making consistent extra payments toward the principal balance can yield huge savings. Borrowers pay more on principal in many different ways. For many people,Perhaps the easiest way to organize this process is to make one additional payment a year. However, some people will not be able to afford this huge additional payment, so splitting an additional payment into 12 additional monthly payments is a great option too. Another popular option is to pay a half payment every two weeks. The result is you will make one additional monthly payment each year. These options differ slightly in lowering the final payback amount and reducing payback length, but they will all significantly reduce the length of your mortgage and lower the total interest paid over the life of the loan.
It may not be possible for you to pay more every month or even every year. But remember that most mortgage contracts will allow additional principal payments at any time. Any time you come into unexpected cash, you can use this provision to pay an additional one-time payment on principal. Here's an example: five years after buying your home, you get a very large tax refund,a large legacy, or a non-taxable cash gift; , you could apply this money toward your loan principal, which would result in huge savings and a shorter loan period. For most loans, even this small amount, paid early in the mortgage, could offer big savings in interest and length of the loan.
Do you have a question regarding a mortgage program?