Extra Payments Provide Huge Mortgage Savings

There's a trick to reduce the repayment period of your mortgage and save you thousands of dollars in interest: Make extra payments that apply to your principal. Borrowers can pay more on principal in many different ways. Making a single extra payment one time every year is likely the easiest to arrange. But many people won't be able to pull off such an enormous extra expense, so dividing one extra payment into 12 additional monthly payments is a great option too. Finally, you can pay a half payment every other week. These options differ slightly in lowering the final payback amount and shortening payback length, but they will all significantly reduce the length of your mortgage and lower your total interest paid.

Lump-sum Additional Payment

It may not be possible for you to pay down your principal every month or even every year. Remember that almost all mortgages will allow you to pay extra on your principal at any point during repayment. You can take advantage of this provision to pay down your mortgage principal any time you get some extra money.

Here's an example: five years after moving into your home, you receive a huge tax refund,a very large legacy, or a non-taxable cash gift; , investing a few thousand dollars into your home's principal will shorten the repayment period of your loan and save enormously on mortgage interest paid over the life of the loan. Unless the loan is quite large, even modest amounts applied early can yield huge savings over the duration of the loan.

1st Credential Mortgage Inc can walk you At 1st Credential Mortgage Inc, we answer questions about interest-saving strategies every day. Give us a call: (281) 778-0805.

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