Making consistent additional payments on the principal balance yields singificant returns. Borrowers can accomplish this in several ways. For many people,Perhaps the simplest way to organize this process is to make 1 additional mortgage payment every year. If you can't pay an additional whole payment all at once, you can divide your payment by 12 and write a check for that additional amount monthly. Another popular option is to pay a half payment every two weeks. The effect here is that you will make one extra monthly payment every year. These options differ a little in reducing 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 duration of the loan.
Some folks can't manage any extra payments. Remember that almost all mortgages will permit you to make additional payments to your principal at any time. You can benefit from this rule to pay extra on your mortgage principal any time you come into extra money.
Here's an example: five years after moving into your home, you get a larger than expected tax refund,a large legacy, or a non-taxable cash gift; , you could pay a portion of this windfall toward your mortgage loan principal, which would result in significant savings and a shortened loan period. Unless the mortgage loan is quite large, even small amounts applied early in the loan period can yield huge benefits over the duration of the loan.
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