The answer is very simple…any time you can afford to do so.
Paying more towards the principal balance on your mortgage loan will help you build equity faster. Equity is the difference between the current value of your home and the balance remaining on your mortgage. For example, if your home value is $200,000 and you owe $150,000 on your mortgage, your equity is $50,000.
By adding money to your monthly payment and designating it to be applied to your principal balance, you are affecting your equity in two ways. First, each extra dollar you put toward the principal balance lowers your amount owed and increases your equity. Secondly, lower debt means less interest paid over the life of the loan, which translates into more of your monthly payment going to the principal balance. Significant savings in interest can be accomplished.
The primary goal of homeownership should be to build as much equity as you can to gain financial security and strength. One of the best ways to achieve this goal is by adding to your principal as often as your budget allows.
