Making regular additional payments toward your loan principal provides huge returns. You can do this using a few different techniques. Making 1 extra full payment one time a year is perhaps the simplest to track. But some people can't afford such a large additional payment, so dividing one additional payment into twelve extra monthly payments works as well. Another very popular option is to pay half of your payment every two weeks. The effect here is that you will make one additional monthly payment each year. These options differ a little in reducing the final payback amount and shortening payback length, but each will significantly reduce the duration of your mortgage and lower the total interest you will pay over the life of the loan.
It may not be possible for you to pay extra every month or even every year. Remember that virtually all mortgage contracts will permit you to pay extra on your principal at any time. You can benefit from this provision to pay extra on your principal when you get some extra money.
For example: several years after buying your home, you get a huge tax refund,a large inheritance, or a cash gift; , you could apply this money toward your mortgage loan principal, resulting in huge savings and a shortened payback period. Unless the loan is quite large, even a few thousand dollars applied early can produce huge savings over the life of the loan.
Do you have a question regarding a mortgage program?