Simple Ways to Save Big on Your Mortgage
Making regular extra payments toward your principal yields big returns. People pay extra in a few different ways. For many people,Perhaps the simplest way to organize this process is to make one extra payment a year. Of course, some folks can't swing such an enormous extra payment, so dividing one extra payment into 12 additional monthly payments works too. Finally, you can commit to paying a half payment every other week. These options differ slightly in reducing the total interest paid and reducing payback length, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.
Lump Sum Extra Payment
Some borrowers just can't make extra payments. Keep in mind that most mortgages will permit you to make additional payments to your principal at any time. Whenever you get some extra money, you can use this provision to pay a one-time additional payment toward your mortgage principal. If, for example, you receive a very large gift or tax refund just a few years into your mortgage, you could apply this windfall toward your loan principal, resulting in huge savings and a shortened payback period. Unless the mortgage loan is quite large, even a few thousand dollars applied early can produce huge benefits over the duration of the loan.