Paying consistent additional payments toward the loan principal will yield enormous returns. People accomplish this goal in several ways. For many people,Perhaps the simplest way to organize this process is by making one extra mortgage payment a year. If you can't afford to pay an additional whole payment in one month, you can divide your payment by 12 and pay that additional amount monthly. Finally, you can pay half of your mortgage payment every other week. These options differ a little in reducing the total interest paid and reducing payback length, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Some folks can't manage extra payments. Remember that almost all mortgage contracts will allow you to make additional payments to your principal at any point during repayment. Whenever you come into extra money, you can use this rule to pay a one-time additional payment on your principal.
For example: five years after buying your home, you receive a larger than expected tax refund,a very large inheritance, or a non-taxable cash gift; , you could pay a portion of this windfall toward your loan principal, resulting in enormous savings and a shorter loan period. For most loans, even a relatively modest amount, paid early in the loan period, could offer huge savings in interest and in the duration of the loan.
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