Making consistent additional payments on the principal will provide huge returns. Borrowers make this happen in several ways. Paying 1 additional payment one time every year is perhaps the easiest to track. Of course, some people will not be able to swing this huge additional payment, so splitting an extra payment into 12 additional monthly payments works too. Finally, you can pay half of your mortgage payment every two weeks. These options differ a little in reducing the final payback amount and shortening payback length, 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 borrowers can't manage any extra payments. But remember that most mortgage contracts allow additional principal payments at any time. Any time you come into extra money, you can use this provision to make a one-time additional payment on your mortgage principal.
Here's an example: a few years after moving into your home, you get a huge tax refund,a very large inheritance, or a non-taxable cash gift; , you could apply this windfall toward your loan principal, resulting in huge savings and a shortened loan period. Unless the mortgage loan is quite large, even a few thousand dollars applied early in the loan period can yield huge savings over the duration of the loan.
Do you have a question regarding a mortgage program?