Extra Payments Yield Big Mortgage Savings
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Here's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars over the course of your loan: Make extra payments which are applied to your principal. Borrowers employ various techniques to meet this goal. For many people,Perhaps the easiest way to organize this process is by making one additional payment per year. If you can't pay an additional whole payment all at once, you can divide that payment by 12 and pay that additional amount monthly. Another very popular option is to pay a half payment every two weeks. The result is you make one additional monthly payment each year. Each option produces different results, but they will all significantly shorten the length of your mortgage and lower the total interest paid over the life of the loan.
Lump-sum Additional Payment
It may not be possible for you to pay down your principal every month or even every year. Remember that most mortgages will permit you to make additional payments to your principal at any point during repayment. You can take advantage of this rule to pay down your principal when you come into extra money. If, for example, you receive a large gift or tax refund four years into your mortgage, paying several thousand dollars into your home's principal can significantly shorten the repayment duration of your loan and save enormously on interest paid over the duration of the loan. For most loans, even a modest amount, paid early in the loan period, could offer big savings in interest and duration of the loan.
At Blue Sky Mortgage, we answer questions about interest-saving strategies every day. Give us a call: 970/476.0602.