Mortgage Savings Tips
There's a trick to significantly reduce the length of your mortgage and save thousands of dollars over the course of your loan: Make extra payments which apply toward the principal. People pay extra in a few different ways. For many people,Perhaps the easiest way to keep track is by making one extra payment a year. If you can't afford to pay an additional 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 other week. These options differ a little in reducing the total interest paid and shortening payback length, but they will all significantly reduce the duration of your mortgage and lower the total interest you will pay over the life of the loan.
One-time Additional Payment
Some people just can't make any extra payments. But you should remember that most mortgages allow additional payments at any time. Any time you get some unexpected money, consider using this rule to pay a one-time additional payment on your mortgage principal. Here's an example: several years after moving into your home, you receive a very large tax refund,a large legacy, or a cash gift; , paying several thousand dollars into your mortgage principal can shorten the repayment duration of your loan and save enormously on interest over the life of the mortgage loan. For most loans, even this relatively small amount, paid early enough in the loan period, could offer huge savings in interest and in the duration of the loan.
Ashok Lakshmanan can walk you through the pitfalls of getting a mortgage. Give us a call at 630-717-3600.