Simple Ways to Save Big on Your Mortgage
Making regular extra payments on your principal balance can yield enormous returns. Borrowers pay extra in a few different ways. For many people,Perhaps the easiest way to organize this process is to make one extra payment per year. But many people will not be able to afford this huge extra payment, so splitting a single extra payment into 12 extra monthly payments is a great option too. Finally, you can pay a half payment every two weeks. These options differ a little in reducing the final payback amount and shortening payback length, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.
Lump Sum Extra Payment
It may not be possible for you to pay more every month or even every year. But remember that most mortgages allow you to make additional principal payments at any time. You can take advantage of this rule to pay extra on your principal any time you get some extra money.
If, for example, you were to receive an unexpected windfall five years into your mortgage, paying a few thousand dollars into your home's principal will significantly reduce the repayment period of your loan and save a huge amount on interest paid over the duration of the mortgage loan. For most loans, even a relatively small amount, paid early enough in the loan period, could offer big savings in interest and duration of the loan.
Ashok Lakshmanan can walk you the mortgage process. Give us a call at 630-717-3600.