Making regular extra payments on the principal balance can yield huge savings. People pay extra in several different ways. Paying one extra full payment one time a year may be the simplest to arrange. However, many people will not be able to swing such a large extra expense, so splitting an extra payment into twelve extra monthly payments is a fine option too. Finally, you can commit to paying half of your mortgage payment every two weeks. Each option produces different results, but each will significantly shorten the length of your mortgage and lower the total interest you will pay over the duration of the loan.
Some folks just can't make any extra payments. Keep in mind that almost all mortgage contracts will permit you to pay extra on your principal at any time. Whenever you come into unexpected money, you can use this rule to pay an additional one-time payment on principal.
If, for example, you were to receive an unexpected windfall five years into your mortgage, investing a few thousand dollars into your home's principal can shorten the period of your loan and save a huge amount on mortgage interest paid over the life of the mortgage loan. For most loans, even a small amount, paid early enough in the mortgage, could offer huge savings in interest and duration of the loan.
Do you have a question regarding a mortgage program?