Paying regular extra payments toward the loan principal can yield big returns. Borrowers pay extra in several different ways. For many people,Perhaps the easiest way to organize this process is to make one extra payment a year. However, some people will not be able to swing this huge extra payment, so splitting a single extra payment into twelve additional monthly payments is a fine option too. Another very popular option is to pay a half payment every two weeks. The effect here is that you make one extra monthly payment each year. These options differ slightly in reducing the final payback amount and shortening payback length, but each will significantly reduce the length of your mortgage and lower your total interest paid.
Some folks can't manage any extra payments. Keep in mind that virtually all mortgages will allow you to make additional payments to your principal at any time. You can take advantage of this provision to pay extra on your principal when you get some extra money.
If, for example, you receive an unexpected windfall just a few years into your mortgage, you could apply this money toward your loan principal, which would result in enormous savings and a shortened payback period. For most loans, even a small amount, paid early enough in the loan period, could offer huge savings in interest and in the length of the loan.
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