Q: Thank you for your free, very informative email newsletter. My question is: What are the pros/cons of making bi-monthly mortgage payments versus an extra mortgage payment at the end of the year?

Either would reduce the number of years one would pay, but is there an advantage of one over the other? Thank you.

A: If you make one extra payment at the beginning of the year, you’ll save the most over time (because you’re paying off the balance most quickly). If you make your monthly payment and add 1/12 of your usual payment to the total, you’ll save the next most money. If you make one extra monthly payment at the end of the year, you’ll save the least of the three options because of the time differential (although you’ll still save money over not doing prepaying at all).

The difference in savings between the three prepayment options is small. It might be a couple of thousand dollars over 30 years. Still, if you’re going to prepay, the best thing to do is deliver one extra full payment in January or add 1/12 of your mortgage payment to each check.

Jan. 19, 2009.