Mortgage Savings Tips
Paying consistent extra payments toward your principal balance can yield big returns. Borrowers can do this in several ways. Making one additional full payment once a year is probably the easiest to arrange. However, some folks can't pull off such a large extra payment, so splitting a single extra payment into 12 extra monthly payments works as well. Finally, you can pay a half payment every two weeks. These options differ slightly in lowering the total interest paid and reducing payback length, but they will all significantly shorten the duration of your mortgage and lower the total interest you will pay over the life of the loan.
One-time Additional Payment
Some folks can't manage any extra payments. But it's important to note that most mortgage contracts will allow additional payments at any time. You can take advantage of this provision to pay down your mortgage principal when you get some extra money. If, for example, you receive a surprise windfall just a few years into your mortgage, you could pay a portion of this money toward your loan principal, resulting in enormous savings and a shorter loan period. Unless the loan is very large, even a few thousand dollars applied early in the loan period can yield huge benefits over the duration of the loan.
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