Making consistent extra payments on your loan principal yields enormous returns. You can accomplish this using a few different techniques. Making a single extra payment once per year is likely the simplest to keep track of. However, some people can't afford such an enormous extra payment, so dividing a single extra payment into 12 extra monthly payments works as well. Another option is to pay a half payment every two weeks. The effect here is that you will make one extra monthly payment each year. These options differ slightly in lowering the total interest paid and shortening payback length, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Some borrowers just can't make any extra payments. But it's important to note that most mortgage contracts allow additional principal payments at any time. Any time you come into unexpected money, you can use this provision to pay an additional one-time payment on your mortgage principal.
If, for example, you were to receive a surprise windfall three years into your mortgage, paying several thousand dollars into your home's principal will shorten the repayment period of your loan and save a huge amount on mortgage interest over the duration of the loan. Unless the loan is very large, even a few thousand dollars applied early can produce huge benefits over the life of the loan.
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