Mortgage Saving Tips
Making consistent extra payments on the principal yields enormous returns. You can accomplish this using a few different techniques. For many people,Perhaps the easiest way to keep track is to make one additional payment a year. But many folks can't pull off such an enormous additional expense, so dividing an additional payment into twelve additional 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 make one extra monthly payment every year. These options differ a little in lowering the final payback amount and reducing payback length, but each will significantly shorten the duration of your mortgage and lower the total interest paid over the duration of the loan.
Lump Sum Extra Payment
It may not be possible for you to pay down your principal every month or even every year. Remember that most mortgages will allow you to make additional payments to your principal at any time. Whenever you come into extra cash, you can use this rule to make an additional one-time payment on your mortgage principal.
If, for example, you receive a surprise windfall five years into your mortgage, you could pay a portion of this money toward your mortgage loan principal, resulting in significant savings and a shortened loan period. 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 At Ashok Lakshmanan, we answer questions about interest-saving strategies every day. Call us at 630-717-3600.