Extra Payments Provide Big Mortgage Savings
Here's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars over the course of your loan: Make additional payments which are applied toward your principal. Borrowers pay against principal by employing various techniques. Paying one extra payment once every year is probably the easiest to track. Of course, some folks will not be able to pull off such an enormous extra payment, so splitting a single extra payment into twelve extra monthly payments is a great option too. Finally, you can commit to paying half of your mortgage payment every two weeks. These options differ slightly in reducing the total interest paid and shortening payback length, but they will all significantly shorten the duration of your mortgage and lower the total interest paid over the duration of the loan.
Lump Sum Extra Payment
Some people just can't make any extra payments. Keep in mind that most mortgages will permit you to make additional payments to your principal at any point during repayment. You can benefit from this rule to pay extra on your principal any time you come into extra money. If, for example, you receive a large gift or tax refund five years into your mortgage, paying several thousand dollars into your home's principal will significantly reduce the period of your loan and save a huge amount on mortgage interest over the life of the mortgage loan. For most loans, even a modest amount, paid early enough in the loan period, could offer huge savings in interest and in the length of the loan.
Wisdom Financial, Inc. can walk you Wisdom Financial, Inc. can answer questions about these interest savings and many others. Call us at 708.499.6088.