Extra Payments Yield Big Savings
There's a simple trick to reduce the repayment period of your mortgage and save thousands in interest: Make extra payments that are applied toward your loan principal. Borrowers pay more on principal by employing various techniques. Paying one additional full payment once per year is perhaps the simplest to track. However, many people will not be able to afford such an enormous extra payment, so splitting an extra payment into 12 additional monthly payments is a great option too. Finally, you can commit to paying half of your mortgage payment every other week. Each option produces different results, but they will all significantly reduce the length of your mortgage and lower your total interest paid.
Additional One-time payment
It may not be possible for you to pay extra every month or even every year. But you should remember that most mortgages will allow additional principal payments at any time. You can take advantage of this rule to pay down your mortgage principal when you get some extra money. If, for example, you receive a large gift or tax refund five years into your mortgage, you could apply a portion of this windfall toward your mortgage loan principal, which would result in significant savings and a shortened payback period. Unless the loan is very large, even modest amounts applied early can yield huge benefits over the life 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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