Additional Payments Yield Big Mortgage Savings
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Here's a simple trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make additional payments that are applied to the principal. Borrowers employ various techniques to meet this goal. For many people,Perhaps the easiest way to keep track is by making one additional mortgage payment a year. But some people will not be able to swing such an enormous additional payment, so splitting one additional payment into 12 additional monthly payments works as well. Another option is to pay half of your payment every two weeks. The result is you will make one additional monthly payment every year. Each option yields slightly different results, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Lump Sum Extra Payment
Some people just can't make any extra payments. But remember that most mortgages will allow you to make additional payments at any time. Whenever you get some unexpected money, you can use this rule to pay a one-time additional payment on your principal. Here's an example: a few years after buying your home, you get a larger than expected tax refund,a very large legacy, or a non-taxable cash gift; , you could apply a portion of this windfall toward your loan principal, which would result in huge savings and a shortened payback period. For most loans, even this modest amount, paid early enough in the loan period, could offer big savings in interest and duration of the loan.
Citywide Home Loans can walk you through the mortgage process. Call us: 4808226290.
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