Here's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars in interest: Make additional payments which apply to your principal. You can do this in various ways. For many people,Perhaps the simplest way to keep track is by making one additional payment per year. Of course, some people will not be able to pull off such an enormous additional expense, so splitting an extra payment into twelve additional monthly payments works as well. Finally, you can commit to paying half of your mortgage payment every other week. Each option produces different results, 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.
One-time Additional Payment
Some folks just can't make any extra payments. Keep in mind that most mortgage contracts will allow 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.
If, for example, you were to receive a large gift or tax refund five years into your mortgage, you could apply this money toward your loan principal, which would result in enormous savings and a shorter payback period. Unless the loan is quite large, even a few thousand dollars applied early in the loan period can produce huge savings over the duration of the loan.
Executive Lending Group, LLC can walk you through the pitfalls of getting a mortgage. Call us at (816) 525-8000.
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