Additional Payments Provide Huge Savings
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Here's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars in interest: Make additional payments which go toward the principal. Borrowers employ various techniques to meet this goal. For many people,Perhaps the simplest way to keep track is to make one additional mortgage payment per year. Of course, some people can't swing such a large additional payment, so splitting one extra payment into twelve additional monthly payments is a fine option too. Another popular option is to pay half of your payment every other week. The effect here is that you will make one extra monthly payment every year. These options differ slightly in lowering the total interest paid and reducing payback length, but they will all significantly reduce the length of your mortgage and lower the total interest you will pay over the duration of the loan.
Lump Sum Extra Payment
It may not be possible for you to pay down your principal every month or even every year. Keep in mind that virtually all mortgages will allow you to pay extra on your principal at any point during repayment. Whenever you come into unexpected money, consider using this provision to pay an additional one-time payment toward mortgage principal.
If, for example, you receive a surprise windfall three years into your mortgage, investing a few thousand dollars into your mortgage principal will shorten the repayment duration of your loan and save a huge amount on mortgage interest paid over the life of the loan. For most loans, even this relatively small amount, paid early in the mortgage, could offer huge savings in interest and length of the loan.
Arch Mortgage Corporation can walk you Arch Mortgage Corporation has your mortgage answers. Give us a call: 561.775.2724.