Paying consistent additional payments toward the principal will yield huge returns. Borrowers pay extra in a few ways. For many people,Perhaps the easiest way to keep track is to make 1 additional payment every year. Of course, some people won't be able to swing such an enormous additional payment, so splitting a single additional payment into twelve extra monthly payments works too. Another very popular option is to pay half of your payment every two weeks. The effect here is that you will make one extra monthly payment in a year. Each of these options yields different results, but they will all significantly reduce the duration of your mortgage and lower the total interest you will pay over the duration of the loan.
Some folks can't manage any extra payments. But you should remember that most mortgages allow you to make additional payments at any time. Whenever you get some extra cash, you can use this rule to pay a one-time additional payment toward principal. Here's an example: several years after moving into your home, you get a huge tax refund,a large inheritance, or a non-taxable cash gift; , you could pay this windfall toward your loan principal, resulting in enormous savings and a shorter payback period. Unless the loan is quite large, even a few thousand dollars applied early in the loan period can yield huge benefits over the life of the loan.
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