The principal balance on a mortgage loan is comprised of principal and interest.http://www.investopedia.com/terms/m/mortgage.asp The amount of money that is placed toward both debt components depends on the type of loan you received, the amount of your payment and the timing of your remittance. The outline of each routine payment is offered in an amortization table you were given during your loan closing.http://www.investopedia.com/terms/a/amortization_schedule.asp

Reducing the outstanding principal on your mortgage can help reduce the amount of interest you will pay over the life of the loan, can increase your equity faster and can shorten your repayment period. Advanced repayment schedules, loan programs and refinancing options can be sources of principal reduction.http://www.investopedia.com/articles/pf/05/022405.asp

Contact your mortgage bank, mortgage brokers and your financial adviser to discuss your principal reduction options. Review the benefits and consequences of each option presented. While paying your principal down faster may reduce your interest expenses, you may lose some tax benefits and the potential earnings on alternative investments.http://loan.yahoo.com/m/primer9.html

Submit a direct, one-time payment to your mortgage company.http://www.investopedia.com/articles/pf/05/022405.asp Before sending a payment, find out what principal payment method your mortgage management company uses. Some companies prefer excess payments to be sent to a separate address from regular mortgage payments. Contact the customer service department of your mortgage company for precise instructions.

Pay your mortgage more frequently than required. Most mortgage payments are set for a monthly remittance. By paying weekly or bimonthly, you will lower the amount of principal faster, which decreases the amount of interest you pay over the course of your loan.http://www.bankrate.com/finance/mortgages/biweekly-mortgage-plans-too-inflexible.aspx Many mortgage companies offer programs that streamline this process by taking a draft out of your bank account on the schedule you select, but you can set up the payments yourself and avoid any enrollment fees.http://moneycentral.msn.com/content/banking/p95441.asp

Add additional money to each mortgage payment. Ensure your account is set up to apply any excess payment directly to principal. You can use money from work earnings above your regular pay, bonuses, and on money saved by cutting non-mortgage expenses. Over the life of the loan, additional payments will reduce the repayment period and the amount of interest paid.http://www.finweb.com/mortgage/how-to-save-big-money-on-you-mortgage.html

Apply for special mortgage programs that reduce the principal balance of your mortgage. These programs are generally offered by a mortgage bank and may be targeted at customers whose outstanding loan is more than their current house value. These programs may require mortgage delinquency to qualify.http://www.housingwatch.com/2010/03/24/bofa-to-reduce-mortgage-principal/

The content in this page is not a substitute for professional financial advice. Please contact a finance professional before using the information presented here.