Additional Payments Yield Huge Savings
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Here's a simple trick to reduce the repayment period of your mortgage and save you thousands over the course of your loan: Make additional payments which go toward your principal. You can accomplish this in various ways. For many people,Perhaps the simplest way to organize this process is to make one extra mortgage payment per year. 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 pay that additional amount monthly. Another very popular option is to pay a half payment every other week. The result is you will make one extra monthly payment in a year. These options differ a little in reducing the final payback amount and shortening payback length, but each will significantly reduce the length of your mortgage and lower the total interest paid over the life of the loan.
One-time Additional Payment
Some borrowers just can't make any extra payments. Remember that virtually all mortgage contracts will permit you to pay extra on your principal at any time. Any time you come into extra money, you can use this provision to make an additional one-time payment on your mortgage principal.
If, for example, you were to receive an unexpected windfall four years into your mortgage, investing several thousand dollars into your home's principal can shorten the period of your loan and save a huge amount on interest paid over the duration of the loan. Unless the loan is quite large, even small amounts applied early can produce huge savings over the life of the loan.
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