Additional Payments Yield Huge Mortgage Savings
Paying consistent extra payments on the loan principal will provide big savings. You pay against principal by employing various techniques. Paying 1 additional payment once a year is likely the simplest to track. If you can't afford to pay an additional whole payment all at once, you can divide that payment by 12 and write a check for that additional amount monthly. Another very popular option is to pay half of your payment every two weeks. The result is you make one extra monthly payment in a year. Each option produces different results, but each will significantly reduce the length of your mortgage and lower your total interest paid.
One-time Additional Payment
Some people can't manage extra payments. Remember that virtually all mortgage contracts will permit you to make additional payments to your principal at any time. Any time you come into extra cash, consider using this rule to make a one-time additional payment toward principal.
If, for example, you were to receive an unexpected windfall five years into your mortgage, you could pay a portion of this money toward your loan principal, resulting in huge savings and a shortened payback period. For most loans, even a relatively small amount, paid early in the loan period, could offer big savings in interest and length of the loan.
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