Additional Payments Yield Huge Savings

Making consistent additional payments toward the loan principal will provide huge returns. You can pay more on principal in many different ways. For many people,Perhaps the easiest way to keep track is to make one additional mortgage payment per year. If you can't pay an extra whole payment all at once, you can divide that payment by 12 and pay that additional amount monthly. Another very popular option is to pay half of your payment every two weeks. The effect here is that you will make one additional monthly payment each year. These options differ slightly in lowering the total interest paid and shortening payback length, but each will significantly reduce the duration of your mortgage and lower your total interest paid.

Lump Sum Extra Payment

Some borrowers just can't make extra payments. But remember that most mortgage contracts will allow additional principal payments at any time. Any time you get some extra cash, consider using this rule to pay an additional one-time payment toward principal.

If, for example, you receive a large gift or tax refund five years into your mortgage, you could pay this money toward your loan principal, resulting in significant savings and a shorter loan period. Unless the mortgage loan is quite large, even a few thousand dollars applied early can yield huge savings over the life of the loan.

Wisdom Financial, Inc. can walk you At Wisdom Financial, Inc., we answer questions about interest-saving strategies almost every day. Give us a call: 708.499.6088.