Extra Payments Yield Big Mortgage Savings

Here's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars over the course of your loan: Make extra payments which go to your loan principal. Borrowers can accomplish this in several ways. For many people,Perhaps the simplest way to organize this process is to make 1 extra payment per year. If you can't afford to pay an additional whole payment in one month, 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 result is you make one additional monthly payment each year. Each option yields different results, but they will all significantly reduce the duration of your mortgage and lower the total interest paid over the duration of the loan.

Lump-sum Additional Payment

It may not be possible for you to pay extra every month or even every year. But you should remember that most mortgages allow 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. If, for example, you were to receive a very large gift or tax refund five years into your mortgage, paying a few thousand dollars into your mortgage principal will significantly reduce the repayment period of your loan and save a huge amount on interest over the life of the loan. Unless the mortgage loan is very large, even a few thousand dollars applied early can produce huge benefits over the duration of the loan.

Wisdom Financial, Inc. can walk you the mortgage process. Give us a call at 708.499.6088.