Additional Payments Yield Huge 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 apply to your loan principal. People employ various techniques to accomplish this goal. For many people,Perhaps the simplest way to keep track is by making one additional payment every year. If you can't pay an additional whole payment in one month, you can divide your payment by 12 and pay that additional amount monthly. Finally, you can pay half of your mortgage payment every two weeks. Each of these options yields slightly different results, but each will significantly shorten the length of your mortgage and lower the total interest paid over the life of the loan.
One-time Additional Payment
Some people can't manage any extra payments. But remember that most mortgage contracts will allow you to make additional payments at any time. Whenever you come into unexpected money, you can use this provision to make a one-time additional payment on mortgage principal. Here's an example: a few years after buying your home, you get a very large tax refund,a large inheritance, or a cash gift; , paying a few thousand dollars into your home's principal can reduce the repayment period of your loan and save enormously on interest paid over the duration of the mortgage loan. For most loans, even a modest amount, paid early enough in the mortgage, could offer huge savings in interest and duration of the loan.
Wisdom Financial, Inc. can walk you the mortgage process. Give us a call at 708.499.6088.