Additional Payments Provide Huge Savings
Paying consistent additional payments on your principal balance will provide big savings. Borrowers can pay against principal in many different ways. Paying 1 additional payment once a year is likely the simplest to keep track of. Of course, many people will not be able to swing such an enormous additional payment, so dividing an additional payment into twelve extra monthly payments is a fine option too. Finally, you can pay a half payment every two weeks. Each option 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
Some folks just can't make extra payments. Keep in mind that most mortgage contracts will allow you to make additional payments to your principal at any time. Whenever you come into extra money, you can use this rule to make an additional one-time payment on your mortgage principal.
If, for example, you receive a surprise windfall three years into your mortgage, paying a few thousand dollars into your mortgage principal will reduce the repayment period of your loan and save a huge amount on mortgage interest paid over the duration of the loan. For most loans, even a relatively modest amount, paid early enough 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 almost every day. Call us at 3038627760.