Making regular extra payments on your loan principal can yield singificant savings. Borrowers can do this in several ways. For many people,Perhaps the easiest way to keep track is to make one extra payment every year. But some people can't pull off such a large additional expense, so splitting an extra payment into twelve extra monthly payments is a great option too. Finally, you can commit to paying half of your mortgage payment every two weeks. Each of these options yields different results, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.
Some people just can't make any extra payments. But it's important to note that most mortgage contracts will allow additional principal payments at any time. Any time you get some extra cash, you can use this provision to make an additional one-time payment on your principal. If, for example, you receive a large gift or tax refund five years into your mortgage, paying several thousand dollars into your home's principal will significantly shorten the repayment duration of your loan and save a huge amount on mortgage interest over the duration of the loan. Unless the loan is very large, even a few thousand dollars applied early in the loan period can produce huge savings over the duration of the loan.
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