Big Interest Savings: Available to Anyone with a Mortgage
There's a simple trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make additional payments which go toward the loan principal. People accomplish this goal in a few different ways. For many people,Perhaps the easiest way to keep track is by making 1 additional mortgage payment a year. But some folks can't swing such an enormous additional payment, so dividing one extra payment into twelve extra monthly payments is a great option too. Finally, you can pay half of your mortgage payment every two weeks. These options differ a little in reducing the total interest paid and reducing payback length, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Lump Sum Extra Payment
It may not be possible for you to pay extra every month or even every year. But you should remember that most mortgage contracts allow you to make additional payments at any time. You can take advantage of this rule to pay down your mortgage principal when you get some extra money.
Here's an example: five years after buying your home, you receive a huge tax refund,a large legacy, or a cash gift; , investing several thousand dollars into your home's principal will significantly reduce the period of your loan and save a huge amount on interest over the duration of the loan. For most loans, even a relatively modest amount, paid early enough in the loan period, could offer big savings in interest and duration of the loan.
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