Mortgage Savings Tips
Making regular extra payments on the principal balance provides big returns. Borrowers can accomplish this in various ways. Paying a single extra payment once a year may be the simplest to arrange. If you can't pay an extra whole payment all at once, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Finally, you can pay half of your mortgage payment every two weeks. These options differ slightly in reducing the final payback amount and reducing payback length, but they will all significantly reduce the length of your mortgage and lower your total interest paid.
Lump-sum Additional Payment
Some people just can't make any extra payments. But you should remember that most mortgages allow you to make additional payments at any time. Whenever you get some unexpected money, consider using this provision to pay a one-time additional payment on principal.
If, for example, you receive an unexpected windfall just a few years into your mortgage, paying a few thousand dollars into your home's principal can shorten the repayment period of your loan and save a huge amount on interest over the duration of the mortgage loan. For most loans, even this small amount, paid early enough in the loan period, could offer huge savings in interest and in the duration of the loan.
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