Making an extra mortgage payment each year can have significant benefits for homeowners. One of the main benefits is that it can significantly reduce the length of the loan and save thousands of dollars in interest charges over the life of the loan.

When you make an extra mortgage payment each year, the additional funds go directly towards paying down the principal balance of the loan. This reduces the amount of interest that accrues on the loan, which in turn reduces the length of the loan. For example, if you have a 30-year mortgage, making an extra payment each year can shorten the loan term by several years.

In addition to reducing the length of the loan, making an extra mortgage payment each year can also save homeowners a significant amount of money in interest charges. This is because the majority of the early payments on a mortgage go towards paying off interest, and not the principal. By paying extra each year, you are able to chip away at the principal balance more quickly, which reduces the amount of interest that accrues over time.

Another benefit of making an extra mortgage payment each year is that it can help homeowners build equity in their home more quickly. Equity is the difference between the value of your home and the amount you owe on your mortgage. As you pay down your mortgage, your equity in the home increases. This can be helpful for homeowners who may want to refinance their home or take out a home equity loan in the future.

It is also important to note that most mortgages have prepayment penalties, which means that you may be charged a fee for paying off your mortgage early. It's important to check with your lender to see if there are any penalties before making extra payments.

In conclusion, making an extra mortgage payment each year can have significant benefits for homeowners. It can shorten the length of the loan, save thousands of dollars in interest charges and help homeowners build equity in their home more quickly. Before making extra payments, it's important to check with your lender to see if there are any penalties for prepayment.