Paying Extra on the Principal

• Each month, when you pay your mortgage repayment loan, you can choose to pay an extra amount directly to the principal left on the loan. Put this amount on the line of your mortgage payment slip that says additional principal. By doing this, you will reduce the length of the loan period because the faster you pay the principal, the faster your home will be paid in full. The addition can be any amount of your choosing, but try to pay as much as possible to bring your loan down quickly. With this method, if something happens and you cannot pay the additional payment, the financial institution cannot hold you liable for it. Merely pay the amount due and resume the additional payments when you can afford it.
  
  Another method for additional principal payments involves converting your mortgage to a semi-monthly mortgage. Under this plan, you do not pay any additional money, but simply break your present payment into two equal parts. You pay half of your mortgage, for example, on the first day of the month, then the other half in 14 days. You continue with this plan, paying every 14 days, thereby paying the equivalent of 13 monthly payments a year. With this plan, your home pays off years earlier because you are reducing the interest by making payments more often. More of the payment applies to principal each month. In order to begin a semi-monthly mortgage plan, you must first find out if your financial institution will convert your present loan to a semi-monthly. Check out the costs for conversion and the money you will save over the life of the loan to see if this is a viable option for you.
  
  

Mortgage Insurance

• It is a wise idea to take out mortgage insurance, which is a special insurance policy that covers you if you lose your job or become disabled and cannot work. In either case, as soon as you lose your income, the mortgage insurance will kick in and pay your mortgage for you until you get another job or go back to work. Although mortgage insurance is another bill to pay and is not a requirement for a mortgage loan, it is highly advisable to add this protection to your mortgage. If you do lose your job, you will not have the additional worry of losing your home.