There's a simple trick to significantly reduce the length of your mortgage and save thousands over the course of your loan: Make extra payments which are applied to the principal. Borrowers can do this in several ways. Paying a single additional payment one time per year may be the easiest to track. If you can't afford to pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another popular option is to pay half of your payment every other week. The result is you make one additional monthly payment in a year. Each of these options produces slightly different results, but they will all significantly shorten the duration of your mortgage and lower the total interest you will pay over the duration of the loan.
Lump Sum Extra Payment
Some people can't manage any extra payments. But it's important to note that most mortgages allow you to make additional principal payments at any time. Whenever you come into unexpected money, you can use this provision to make an additional one-time payment on principal. If, for example, you receive a large gift or tax refund just a few years into your mortgage, investing several thousand dollars into your mortgage principal will shorten the duration of your loan and save enormously on interest over the life of the mortgage loan. For most loans, even a small amount, paid early in the loan period, could offer big savings in interest and length of the loan.
C2 Financial Corporation can walk you At C2 Financial Corporation, we answer questions about interest-saving strategies almost every day. Call us at (727) 478-2797.
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