Extra Payments Yield Huge Mortgage Savings

Here's a simple trick to reduce the repayment period of your mortgage and save you thousands in interest: Make extra payments which are applied toward the principal. You can pay extra on principal by employing various techniques. Paying 1 extra payment one time every year is perhaps the simplest to track. If you can't afford to 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. Another popular option is to pay a half payment every other week. The effect here is that you make one additional monthly payment every year. Each option yields slightly different results, but each will significantly reduce 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. Remember that most mortgage contracts will permit you to make additional payments to your principal at any point during repayment. Whenever you get some unexpected cash, consider using this provision to pay an additional one-time payment on your principal. Here's an example: several years after moving into your home, you get a huge tax refund,a large inheritance, or a non-taxable cash gift; , investing several thousand dollars into your home's principal can significantly shorten the repayment duration of your loan and save enormously on interest over the duration of the loan. Unless the loan is very large, even a few thousand dollars applied early in the loan period can produce huge savings over the duration of the loan.

MidTowne Mortgage can walk you through the pitfalls of getting a mortgage. Call us at 4787462063.