Making regular extra payments on the principal will provide huge returns. People pay extra in a few different ways. Making one additional full payment once every year is probably the easiest to track. Of course, many folks will not be able to afford such an enormous additional expense, so dividing an additional payment into twelve additional monthly payments works too. Finally, you can commit to paying a half payment every two weeks. These options differ slightly in reducing the final payback amount and shortening payback length, but each will significantly shorten the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay extra every month or even every year. But you should remember that most mortgages will allow you to make additional principal payments at any time. Whenever you come into extra money, consider using this rule to pay a one-time additional payment on principal. Here's an example: several years after buying your home, you receive a very large tax refund,a very large inheritance, or a non-taxable cash gift; , paying several thousand dollars into your home's principal can reduce the duration of your loan and save enormously on mortgage interest paid over the life of the mortgage loan. Unless the mortgage loan is quite large, even a few thousand dollars applied early in the loan period can produce huge savings over the life of the loan.
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