Making consistent additional payments toward the loan principal yields big returns. Borrowers use different methods to meet this goal. Making a single additional payment one time every year may be the simplest to track. If you can't afford to pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Another very popular option is to pay half of your payment every other week. The effect here is that you will make one additional monthly payment every year. These options differ slightly in lowering the final payback amount and reducing payback length, but they will all significantly reduce the duration of your mortgage and lower the total interest paid over the life of the loan.
One-time Additional Payment
Some folks can't manage extra payments. But you should remember that most mortgage contracts allow additional payments at any time. You can take advantage of this provision to pay down your mortgage principal when you come into extra money.
Here's an example: several years after moving into your home, you receive a larger than expected tax refund,a large legacy, or a non-taxable cash gift; , you could apply this money toward your loan principal, which would result in huge savings and a shortened loan period. For most loans, even this modest amount, paid early enough in the loan period, could offer huge savings in interest and length of the loan.
America's Money Source can walk you through the pitfalls of getting a mortgage. Call us: (407) 898-7559.
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