Paying consistent extra payments on the principal balance can yield singificant returns. You can do this using a few different techniques. Paying 1 additional payment one time a year may be the easiest to track. If you can't pay an extra whole payment in one month, you can divide that payment by 12 and write a check for that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every two weeks. These options differ slightly in reducing the final payback amount and shortening payback length, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Some people just can't make any extra payments. Remember that almost all mortgage contracts will allow you to pay extra on your principal at any time. Whenever you come into extra money, consider using this rule to pay a one-time additional payment on mortgage principal.
For example: several years after buying your home, you get a very large tax refund,a very large inheritance, or a non-taxable cash gift; , paying several thousand dollars into your home's principal will significantly reduce the repayment period of your loan and save a huge amount on mortgage interest over the life of the mortgage loan. Unless the loan is very large, even modest amounts applied early can produce huge benefits over the duration of the loan.
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