Save on your Mortgage
There's a trick to reduce the repayment period of your mortgage and save thousands of dollars over the course of your loan: Make extra payments that apply to the principal. Borrowers use different methods to accomplish this goal. Making one additional payment one time every year is likely the simplest to keep track of. But some people won't be able to afford such a large extra payment, so splitting an additional payment into twelve extra monthly payments is a great option too. Another option is to pay half of your payment every other week. The effect here is that you will make one additional monthly payment each year. These options differ slightly in lowering the total interest paid and reducing payback length, but each will significantly reduce the length of your mortgage and lower your total interest paid.
Lump Sum Extra Payment
It may not be possible for you to pay down your principal every month or even every year. Remember that virtually all mortgage contracts will permit you to pay extra on your principal at any time. You can benefit from this rule to pay extra on your principal any time you get some extra money. If, for example, you receive a very large gift or tax refund five years into your mortgage, you could pay a portion of this windfall toward your mortgage loan principal, which would result in enormous savings and a shorter payback period. For most loans, even a small amount, paid early in the loan period, could offer big savings in interest and length of the loan.
Professional Mortgage Solutions Inc. (237990) can walk you through the pitfalls of getting a mortgage. Give us a call at 630-717-3600.