Extra Payments Yield Huge Mortgage Savings
Making regular additional payments toward your loan principal can yield singificant savings. Borrowers can do this in several ways. Making 1 additional full payment one time per year may be the easiest to track. But many people can't pull off this huge extra payment, so splitting an additional payment into 12 additional monthly payments is a great option too. Finally, you can pay a half payment every two weeks. Each of these options yields slightly different results, but they will all significantly shorten the length of your mortgage and lower your total interest paid.
Lump Sum Extra Payment
It may not be possible for you to pay down your principal every month or even every year. But remember that most mortgages will allow additional principal payments at any time. You can take advantage of this rule to pay down your mortgage principal when you come into extra money. If, for example, you were to receive a very large gift or tax refund just a few years into your mortgage, you could pay a portion of this windfall toward your loan principal, resulting in significant savings and a shorter payback period. Unless the loan is quite large, even a few thousand dollars applied early can produce huge savings over the life of the loan.
Tenby J. Dahman can walk you At Tenby J. Dahman, we answer questions about interest-saving strategies almost every day. Call us: 3038627760.