Paying consistent extra payments toward the principal yields singificant returns. Borrowers can do this in several ways. For many people,Perhaps the easiest way to keep track is to make 1 extra mortgage payment per year. If you can't afford to pay an extra whole payment in one month, you can divide your payment by 12 and pay that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every other week. Each of these options yields different results, but each will significantly reduce the length of your mortgage and lower your total interest paid.
Some borrowers can't manage extra payments. But it's important to note that most mortgage contracts allow additional payments at any time. Any time you come into unexpected money, you can use this rule to pay an additional one-time payment on your principal.
If, for example, you receive a large gift or tax refund four years into your mortgage, you could apply this money toward your loan principal, which would result in significant savings and a shorter payback period. Unless the mortgage loan is very large, even a few thousand dollars applied early in the loan period can produce huge savings over the duration of the loan.
BancZone can walk you through the pitfalls of getting a mortgage. Give us a call at 407-583-6250.