Extra Payments Yield Huge Mortgage Savings
There's a trick to significantly reduce the length of your mortgage and save thousands of dollars over the course of your loan: Make additional payments that are applied toward your principal. You can pay more on principal by employing various techniques. Making a single extra full payment once every year is probably the easiest to keep track of. Of course, many folks won't be able to pull off such an enormous extra expense, so dividing one extra payment into twelve extra monthly payments is a great option too. Another option is to pay half of your payment every two weeks. The result is you make one extra monthly payment every year. These options differ slightly in reducing the total interest paid and shortening payback length, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.
One-time Additional Payment
It may not be possible for you to pay more every month or even every year. Remember that most mortgages will allow you to make additional payments to your principal at any point during repayment. You can benefit from this provision to pay extra on your mortgage principal any time you get some extra money.
Here's an example: a few years after buying your home, you get a larger than expected tax refund,a very large inheritance, or a non-taxable cash gift; , investing several thousand dollars into your mortgage principal will significantly reduce the period of your loan and save enormously on interest over the life of the mortgage loan. Unless the mortgage loan is quite large, even modest amounts applied early in the loan period can produce huge benefits over the life of the loan.
PREMIERE MORTGAGE SERVICES INC. can walk you the mortgage process. Call us: 978-422-2311.