Save on Your Mortgage

Making consistent additional payments toward the loan principal will provide huge savings. Borrowers use different methods to accomplish this goal. For many people,Perhaps the easiest way to keep track is to make 1 additional mortgage payment per year. However, some folks will not be able to pull off such a large additional payment, so dividing an additional payment into twelve additional monthly payments is a fine option too. Another popular option is to pay half of your payment every other week. The effect here is that you make one extra monthly payment each year. Each of these options yields different results, but they will all significantly reduce the duration of your mortgage and lower the total interest you will pay over the duration of the loan.

Lump Sum Extra Payment

It may not be possible for you to pay extra every month or even every year. Keep in mind that most mortgages will permit you to make additional payments to your principal at any time. Whenever you get some unexpected money, consider using this rule to pay an additional one-time payment toward your principal. If, for example, you receive a large gift or tax refund just a few years into your mortgage, paying several thousand dollars into your home's principal can significantly shorten the duration of your loan and save enormously on interest over the life of the loan. For most loans, even this relatively modest amount, paid early in the mortgage, could offer big savings in interest and length of the loan.