Making regular extra payments on your loan principal yields singificant savings. Borrowers pay extra in several different ways. Making a single extra full payment once per year may be the easiest to keep track of. However, some people won't be able to pull off such a large extra payment, so dividing one additional payment into twelve extra monthly payments is a great option too. Finally, you can commit to paying a half payment every other week. These options differ a little in lowering the final payback amount and reducing payback length, but each will significantly shorten the duration of your mortgage and lower the total interest paid over the life of the loan.
Some folks can't manage any extra payments. Keep in mind that virtually all mortgages will allow you to pay extra on your principal at any time. You can take advantage of this provision to pay extra on your principal any time you get some extra money. If, for example, you were to receive a very large gift or tax refund four years into your mortgage, investing a few thousand dollars into your mortgage principal will reduce the duration of your loan and save a huge amount on interest paid over the life of the loan. Unless the mortgage loan is quite large, even small amounts applied early can yield huge savings over the life of the loan.
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