Extra Payments Provide Big Mortgage Savings
Here's a simple trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make additional payments that apply to your principal. Borrowers can accomplish this in several ways. Paying one additional payment once a year is likely the simplest to track. If you can't pay an extra whole payment in one month, you can divide that payment by 12 and pay that additional amount monthly. Finally, you can commit to paying a half payment every other week. Each option produces slightly different results, but they will all significantly reduce the duration of your mortgage and lower the total interest you will pay over the duration of the loan.
Lump-sum Additional Payment
Some folks can't manage extra payments. But you should remember that most mortgage contracts will allow additional payments at any time. Whenever you get some unexpected money, you can use this provision to make a one-time additional payment toward mortgage principal.
If, for example, you receive a very large gift or tax refund four years into your mortgage, paying a few thousand dollars into your mortgage principal will shorten the repayment duration of your loan and save a huge amount on mortgage interest over the duration of the loan. For most loans, even a modest amount, paid early in the mortgage, could offer huge savings in interest and in the duration of the loan.
Tenby J. Dahman can walk you At Tenby J. Dahman, we answer questions about money-saving strategies every day. Give us a call: 3038627760.