Save on Your Mortgage
Here's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars in interest: Make additional payments that go toward the loan principal. People make this happen in several ways. Paying a single additional full payment once a year may be the easiest to keep track of. However, some folks won't be able to swing this huge extra expense, so dividing an additional payment into twelve additional monthly payments works too. Finally, you can commit to paying half of your mortgage payment every two weeks. Each option produces slightly different results, but each will significantly shorten the duration of your mortgage and lower the total interest you will pay over the life of the loan.
Lump Sum Extra Payment
It may not be possible for you to pay more every month or even every year. But remember that most mortgage contracts will allow you to make additional principal payments at any time. You can take advantage of this rule to pay extra on your mortgage principal when you come into extra money.
For example: five years after moving into your home, you receive a very large tax refund,a very large inheritance, or a cash gift; , you could apply this money toward your loan principal, resulting in significant savings and a shorter loan period. Unless the loan is quite large, even small amounts applied early can yield huge benefits over the duration of the loan.
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