Simple Ways to Save Big on Your Mortgage
There's a trick to reduce the repayment period of your mortgage and save thousands in interest: Make extra payments which apply to your principal. You pay extra on principal in many different ways. For many people,Perhaps the simplest way to organize this process is by making one additional payment every year. But some people won't be able to swing such a large extra expense, so dividing one extra payment into twelve extra monthly payments is a fine option too. Finally, you can pay a half payment every other week. These options differ a little in reducing the total interest paid and reducing payback length, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.
Lump Sum Extra Payment
Some borrowers can't manage extra payments. But remember that most mortgages allow you to make additional principal payments at any time. Whenever you come into extra cash, you can use this rule to pay a one-time additional payment toward mortgage principal. If, for example, you were to receive a large gift or tax refund five years into your mortgage, paying several thousand dollars into your mortgage principal will significantly shorten the repayment duration of your loan and save enormously on mortgage interest over the duration of the mortgage loan. Unless the loan is quite large, even a few thousand dollars applied early can yield huge savings over the duration of the loan.
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