There's a 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 your loan principal. Borrowers use different methods to meet this goal. For many people,Perhaps the easiest way to keep track is by making 1 additional payment per year. If you can't pay an extra whole payment in one month, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every two weeks. These options differ a little in lowering the total interest paid and reducing payback length, but each will significantly shorten the duration of your mortgage and lower the total interest you will pay over the life of the loan.
Lump Sum Extra Payment
It may not be possible for you to pay extra every month or even every year. Remember that virtually all mortgage contracts will allow you to pay extra on your principal at any time. Whenever you come into extra cash, you can use this rule to make an additional one-time payment toward principal. For example: a few years after buying your home, you receive a very large tax refund,a large inheritance, or a cash gift; , you could apply this windfall toward your mortgage loan principal, which would result in significant savings and a shortened loan period. For most loans, even this modest amount, paid early in the mortgage, could offer big savings in interest and duration of the loan.
Executive Lending Group, LLC can walk you At Executive Lending Group, LLC, we answer questions about interest-saving strategies every day. Give us a call at (816) 525-8000.
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