Huge Interest Savings: Available to Anyone
There's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars in interest: Make additional payments that apply toward your principal. Borrowers can pay extra on principal in many different ways. Paying one extra full payment one time per year may be the simplest to keep track of. Of course, some people can't afford such a large additional expense, so dividing an additional payment into twelve additional monthly payments is a fine option too. Another popular option is to pay half of your payment every other week. The effect here is that you will make one additional monthly payment each year. These options differ a little in lowering the final payback amount and shortening payback length, but they will all significantly shorten the length of your mortgage and lower the total interest paid over the life of the loan.
Lump Sum Extra Payment
Some people just can't make any extra payments. Keep in mind that most mortgage contracts will permit you to pay extra on your principal at any point during repayment. You can benefit from this provision 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 five years into your mortgage, investing several thousand dollars into your mortgage principal can reduce the repayment period of your loan and save a huge amount on interest over the duration of the loan. For most loans, even this modest amount, paid early in the loan period, could offer huge savings in interest and length of the loan.
America's Money Source can walk you America's Money Source has your mortgage answers. Give us a call: (407) 898-7559.
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