Extra Payments Yield Big Savings
Paying consistent extra payments on the loan principal provides huge returns. People use different methods to accomplish this goal. Paying 1 extra payment once per year is likely the easiest to keep track of. But some folks will not be able to afford such a large extra payment, so splitting an extra payment into twelve extra monthly payments is a great option too. Finally, you can commit to paying a half payment every other week. Each option produces slightly different results, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.
Additional One-time payment
It may not be possible for you to pay extra every month or even every year. But remember that most mortgage contracts allow you to make additional principal payments at any time. You can take advantage of this rule to pay extra on your principal when you come into extra money. Here's an example: several years after moving into your home, you get a larger than expected tax refund,a large inheritance, or a non-taxable cash gift; , you could apply this money toward your loan principal, which would result in huge savings and a shorter loan period. For most loans, even a small amount, paid early enough in the loan period, could offer huge savings in interest and duration of the loan.
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