Additional Payments Yield Big Savings
Making regular additional payments toward your loan principal will provide big savings. People employ various techniques to meet this goal. For many people,Perhaps the easiest way to keep track is to make one additional payment every year. Of course, some folks will not be able to pull off this huge extra expense, so splitting one extra payment into 12 extra monthly payments works too. Another option is to pay a half payment every two weeks. The effect here is that you make one extra monthly payment each year. These options differ slightly in reducing the final payback amount and reducing payback length, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Lump-sum Additional Payment
It may not be possible for you to pay more every month or even every year. But remember that most mortgages will allow you to make additional principal payments at any time. You can benefit from this provision to pay down your principal when you come into extra money.
For example: five years after moving into your home, you get a larger than expected tax refund,a large legacy, or a non-taxable cash gift; , paying a few thousand dollars into your home's principal can significantly shorten the repayment duration of your loan and save a huge amount on interest paid over the duration of the mortgage loan. Unless the loan is quite large, even a few thousand dollars applied early in the loan period can produce huge savings over the duration of the loan.
Savers Home Loans can walk you At Savers Home Loans, we answer questions about money-saving strategies every day. Call us: (800) 974-0509.