Paying consistent additional payments on the principal balance will provide singificant savings. People employ various techniques to accomplish this goal. For many people,Perhaps the easiest way to organize this process is by making 1 additional mortgage payment per year. Of course, some people can't afford such an enormous additional payment, so splitting one additional payment into twelve extra monthly payments works as well. Another very popular option is to pay half of your payment every two weeks. The effect here is that you make one extra monthly payment every year. These options differ slightly in lowering the final payback amount and shortening payback length, but each will significantly shorten the duration of your mortgage and lower the total interest you will pay over the life of the loan.
Lump Sum Extra Payment
It may not be possible for you to pay more every month or even every year. But remember that most mortgages will allow additional payments at any time. You can benefit from this rule to pay down your mortgage principal when you get some extra money.
For example: several years after buying your home, you get a larger than expected tax refund,a very large inheritance, or a non-taxable cash gift; , paying several thousand dollars into your mortgage principal will reduce the period of your loan and save a huge amount on mortgage interest over the duration of the mortgage loan. For most loans, even this relatively small amount, paid early in the mortgage, could offer huge savings in interest and in the duration of the loan.
Wisdom Financial, Inc. can walk you Wisdom Financial, Inc. can answer questions about these interest savings and many others. Give us a call: 708.499.6088.