Save Big on Your Mortgage
Making consistent extra payments on the principal balance will yield singificant returns. People make this happen in several ways. Making 1 extra full payment one time a year is perhaps the simplest to keep track of. If you can't pay an extra whole payment all at once, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Finally, you can pay a half payment every other week. These options differ a little in lowering the total interest paid and shortening payback length, but they will all significantly shorten the duration of your mortgage and lower the total interest paid over the duration of the loan.
Lump Sum Extra Payment
It may not be possible for you to pay more every month or even every year. Keep in mind that most mortgage contracts will allow you to pay extra on your principal at any time. You can benefit from this provision to pay down your mortgage principal when you come into extra money. For example: several years after moving into your home, you receive a huge tax refund,a very large legacy, or a cash gift; , you could pay this money toward your loan principal, resulting in significant savings and a shorter loan period. For most loans, even a modest amount, paid early in the mortgage, could offer huge savings in interest and duration of the loan.