Extra Payments Provide Big Mortgage Savings
Paying regular additional payments toward the principal yields singificant savings. Borrowers make this happen in a few ways. For many people,Perhaps the easiest way to keep track is to make 1 extra mortgage payment per year. But many people can't pull off this huge additional expense, so splitting one additional payment into twelve extra monthly payments works as well. Another popular option is to pay a half payment every other week. The effect here is that you will make one extra monthly payment every year. These options differ a little in lowering the final payback amount and shortening payback length, but each will significantly reduce the length of your mortgage and lower the total interest you will pay over the life of the loan.
Lump Sum Extra Payment
Some borrowers just can't make extra payments. But you should remember that most mortgages allow additional payments at any time. You can benefit from this provision to pay extra on your mortgage principal when you get some extra money.
For example: several years after buying your home, you get a very large tax refund,a very large legacy, or a non-taxable cash gift; , paying several thousand dollars into your mortgage principal can significantly shorten the repayment duration of your loan and save a huge amount on mortgage interest over the duration of the loan. Unless the mortgage loan is very large, even a few thousand dollars applied early can produce huge savings over the life of the loan.
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