Big Savings on Interest: Available to Anyone
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Paying consistent additional payments toward the principal can yield big returns. Borrowers pay extra in several different ways. For many people,Perhaps the easiest way to keep track is to make 1 extra mortgage payment every year. If you can't pay an extra whole payment in one month, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Another popular option is to pay a half payment every two weeks. The effect here is that you will make one additional monthly payment each year. These options differ slightly in lowering the final payback amount and shortening payback length, but each will significantly reduce the length of your mortgage and lower the total interest you will pay over the life of the loan.
One-time Additional Payment
Some borrowers just can't make any extra payments. Remember that almost all mortgage contracts will allow you to pay extra on your principal at any time. Whenever you come into extra money, consider using this rule to make an additional one-time payment on principal.
If, for example, you receive a large gift or tax refund three years into your mortgage, paying several thousand dollars into your home's principal will significantly shorten the repayment period of your loan and save enormously on mortgage interest over the duration of the mortgage loan. For most loans, even this relatively modest amount, paid early in the mortgage, could offer huge savings in interest and length of the loan.
Debbie Oliver NMLS License #248252, America's First Choice Mortgage, NMLS License #279234 can answer questions about these interest savings and many others. Give us a call: 214-663-5355.