Additional Payments Provide Big Savings
There's a trick to significantly reduce the length of your mortgage and save you thousands of dollars over the course of your loan: Make additional payments that are applied to the loan principal. You can do this using a few different techniques. For many people,Perhaps the simplest way to keep track is to make one additional payment a year. If you can't pay an extra whole payment all at once, you can divide that payment by 12 and write a check for that additional amount monthly. Another option is to pay half of your payment every two weeks. The effect here is that you make one additional monthly payment each year. These options differ slightly in lowering the final payback amount and shortening payback length, but each will significantly reduce the duration of your mortgage and lower the total interest you will pay over the duration of the loan.
Lump Sum Extra Payment
It may not be possible for you to pay more every month or even every year. Remember that virtually all mortgage contracts will permit you to make additional payments to your principal at any point during repayment. You can take advantage of this rule to pay down your mortgage principal any time you get some extra money. If, for example, you were to receive a surprise windfall just a few years into your mortgage, investing a few thousand dollars into your mortgage principal will significantly reduce the period of your loan and save enormously on interest paid over the duration of the loan. Unless the loan is quite large, even modest amounts applied early in the loan period can yield huge savings over the duration of the loan.
Professional Choice Mortgage can walk you At Professional Choice Mortgage, we answer questions about interest-saving strategies every day. Give us a call: 814-861-3310.