Here's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars over the course of your loan: Make extra payments which are applied to your principal. Borrowers make this happen in a few different ways. Making one additional full payment once a year is likely the easiest to track. If you can't afford to pay an additional whole payment all at once, you can divide your payment by 12 and pay that additional amount monthly. Another option is to pay a half payment every two weeks. The result is you will make one additional monthly payment each year. Each option yields slightly different results, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.
Lump-sum Additional Payment
Some people just can't make extra payments. Keep in mind that almost all mortgage contracts will allow you to make additional payments to your principal at any point during repayment. Any time you come into extra cash, consider using this provision to make a one-time additional payment toward your mortgage principal. For example: five years after buying your home, you get a larger than expected tax refund,a large legacy, or a non-taxable cash gift; , paying a few thousand dollars into your home's principal can reduce the repayment duration of your loan and save a huge amount on mortgage interest over the life of the loan. For most loans, even a relatively modest amount, paid early in the loan period, could offer huge savings in interest and in the duration of the loan.
Tenby J. Dahman can walk you the mortgage process. Call us at 3038627760.