Extra Payments Provide Huge Savings

Here's a simple trick to reduce the repayment period of your mortgage and save you thousands in interest: Make additional payments that are applied toward the loan principal. People make this happen in a few ways. Paying a single extra payment one time per year is perhaps the easiest to track. Of course, some people will not be able to pull off such a large additional payment, so dividing a single additional payment into 12 additional monthly payments is a fine option too. Another very popular option is to pay a half payment every other week. The result is you will make one extra monthly payment every year. These options differ a little in lowering the total interest paid and reducing payback length, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.

Lump-sum Additional Payment

It may not be possible for you to pay more every month or even every year. But remember that most mortgages will allow you to make additional payments at any time. You can benefit from this rule to pay extra on your principal any time you get some extra money.

For example: a few years after buying your home, you receive a larger than expected tax refund,a large legacy, or a cash gift; , you could pay a portion of this windfall toward your loan principal, which would result in significant savings and a shortened loan period. Unless the loan is very large, even a few thousand dollars applied early in the loan period can produce huge benefits over the life of the loan.

Tenby J. Dahman The Dahman Team can walk you Tenby J. Dahman The Dahman Team can answer questions about these interest savings and many others. Call us at 3038627760.