Mortgage Savings Tips

Here's a simple trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make extra payments that go to the loan principal. Borrowers can do this using a few different techniques. Paying one extra payment one time a year is probably the easiest to track. However, many folks can't pull off such a large additional expense, so dividing one additional payment into 12 additional monthly payments works as well. Another very popular option is to pay half of your payment every other week. The result is you will make one additional monthly payment in a year. These options differ slightly in reducing the total interest paid and reducing payback length, but they will all significantly reduce the length of your mortgage and lower your total interest paid.

Lump Sum Extra Payment

It may not be possible for you to pay more every month or even every year. Keep in mind that almost all mortgages will allow you to pay extra on your principal at any time. You can take advantage of this provision to pay down your mortgage principal any time you get some extra money. If, for example, you receive a large gift or tax refund five years into your mortgage, you could apply a portion of this windfall toward your mortgage loan principal, which would result in significant savings and a shortened payback period. For most loans, even this relatively modest amount, paid early in the loan period, could offer big savings in interest and length of the loan.

1st Credential Mortgage Inc can walk you through the pitfalls of getting a mortgage. Call us at (281) 778-0805.

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