Save Big on your Mortgage
Making regular additional payments on your loan principal will provide big returns. Borrowers pay against principal by employing various techniques. Making a single additional full payment once per year is likely the easiest to track. If you can't pay an extra whole payment all at once, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Another popular option is to pay half of your payment every two weeks. The result is you will make one extra monthly payment in a year. These options differ slightly in reducing the final payback amount and reducing payback length, but each will significantly shorten the length of your mortgage and lower your total interest paid.
One-time Additional Payment
It may not be possible for you to pay extra every month or even every year. Remember that most mortgage contracts will permit you to make additional payments to your principal at any time. Whenever you come into extra cash, you can use this rule to pay an additional one-time payment on your mortgage principal. If, for example, you receive an unexpected windfall three years into your mortgage, paying a few thousand dollars into your mortgage principal will reduce the repayment period of your loan and save a huge amount on mortgage interest paid over the life of the loan. Unless the mortgage loan is quite large, even small amounts applied early in the loan period can produce huge benefits over the duration of the loan.
Ashok Lakshmanan can walk you At Ashok Lakshmanan, we answer questions about money-saving strategies every day. Call us: 630-717-3600.