Save on your Mortgage Loan
Paying regular extra payments toward your principal balance can yield singificant savings. People pay extra in a few ways. Paying a single additional full payment one time per year may be the easiest to keep track of. But many folks won't be able to swing such an enormous additional payment, so splitting one additional payment into 12 additional monthly payments is a fine option too. Finally, you can commit to paying half of your mortgage payment every other week. Each of these options yields different results, but they will all significantly shorten the duration of your mortgage and lower the total interest paid over the life of the loan.
Lump Sum Extra Payment
Some borrowers just can't make any extra payments. But you should remember that most mortgage contracts allow you to make additional payments at any time. Any time you get some extra money, consider using this provision to make a one-time additional payment on your mortgage principal. If, for example, you were to receive an unexpected windfall four years into your mortgage, you could apply this windfall toward your loan principal, which would result in huge savings and a shortened loan period. For most loans, even this relatively small amount, paid early in the mortgage, could offer big savings in interest and duration of the loan.