Making consistent additional payments toward the principal yields singificant savings. Borrowers pay extra in a few different ways. Making 1 additional full payment one time per year is likely the easiest to track. However, many people can't afford such an enormous extra expense, so splitting an additional payment into twelve additional monthly payments works as well. Finally, you can commit to paying half of your mortgage payment every other week. Each option produces slightly different results, but each will significantly reduce the duration of your mortgage and lower the total interest paid over the duration of the loan.
Some borrowers can't manage any extra payments. But remember that most mortgages will allow you to make additional principal payments at any time. You can benefit from this rule to pay extra on your mortgage principal any time you get some extra money. If, for example, you were to receive a large gift or tax refund three years into your mortgage, investing several thousand dollars into your mortgage principal can significantly reduce the repayment period of your loan and save enormously on interest paid over the duration of the loan. Unless the loan is quite large, even a few thousand dollars applied early in the loan period can produce huge savings over the duration of the loan.
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