Making consistent additional payments toward the loan principal yields enormous savings. You can pay against principal in many different ways. For many people,Perhaps the simplest way to organize this process is by making 1 additional mortgage payment every year. However, some folks won't be able to swing such a large extra payment, so dividing an additional payment into 12 additional monthly payments works as well. Finally, you can commit to paying a half payment every two weeks. These options differ a little in lowering the total interest paid and shortening payback length, but each will significantly shorten 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 extra every month or even every year. But remember that most mortgage contracts allow you to make additional payments at any time. Whenever you get some extra cash, consider using this rule to make an additional one-time payment on your principal.
For example: five years after buying your home, you get a very large tax refund,a very large legacy, or a non-taxable cash gift; , paying several thousand dollars into your home's principal can shorten the duration of your loan and save enormously on interest over the duration of the mortgage loan. Unless the mortgage loan is very large, even modest amounts applied early can produce huge savings over the duration of the loan.
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