Huge Interest Savings: Available to Anyone
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There's a trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make additional payments that go toward the loan principal. You pay extra on principal by employing various techniques. Paying one extra full payment one time a year is perhaps the easiest to arrange. If you can't afford to pay an extra whole payment in one month, you can divide your payment by 12 and write a check for that additional amount monthly. Finally, you can pay half of your mortgage payment every two weeks. Each of these options yields slightly different results, but each will significantly shorten the length 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 you should remember that most mortgage contracts will allow you to make additional principal payments at any time. You can benefit from this rule to pay down your principal any time you come into extra money. Here's an example: a few years after moving into your home, you get a larger than expected tax refund,a very large legacy, or a non-taxable cash gift; , you could pay this money toward your mortgage loan principal, resulting in huge savings and a shortened payback period. Unless the loan is very large, even modest amounts applied early can produce huge benefits over the duration of the loan.