Here's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars over the course of your loan: Make additional payments which go toward the loan principal. Borrowers employ various techniques to accomplish this goal. For many people,Perhaps the easiest way to keep track is by making 1 additional mortgage payment per year. But some people can't pull off such a large additional payment, so dividing one extra payment into 12 additional monthly payments works too. Another option is to pay half of your payment every other week. The result is you will make one additional monthly payment every year. These options differ a little in lowering 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
It may not be possible for you to pay extra every month or even every year. Keep in mind that virtually all mortgage contracts will permit you to make additional payments to your principal at any time. You can benefit from this provision to pay down your mortgage principal when you come into extra money.
For example: five years after moving into your home, you receive a larger than expected tax refund,a very large legacy, or a cash gift; , paying a few thousand dollars into your home's principal can shorten the repayment period of your loan and save a huge amount on mortgage interest over the life of the loan. For most loans, even this relatively modest amount, paid early in the mortgage, could offer big savings in interest and length of the loan.
Carter Financial Solutions can walk you Carter Financial Solutions can answer questions about these interest savings and many others. Call us: 866-840-8745 x2.
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