Extra Payments Provide Big Savings
Making regular extra payments on the principal yields enormous returns. Borrowers can do this in various ways. For many people,Perhaps the easiest way to keep track is to make 1 extra payment every year. 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 option is to pay half of your payment every other week. The result is you make one extra monthly payment in a year. These options differ a little in lowering the total interest paid and reducing payback length, but they will all significantly shorten the length of your mortgage and lower the total interest you will pay over the duration of the loan.
Lump-sum Additional Payment
Some borrowers can't manage any extra payments. But remember that most mortgage contracts allow you to make additional principal payments at any time. Any time you come into unexpected money, you can use this provision to make a one-time additional payment toward your mortgage principal. If, for example, you receive a large gift or tax refund four years into your mortgage, paying a few thousand dollars into your home's principal will reduce the duration of your loan and save a huge amount on mortgage interest over the life of the mortgage loan. For most loans, even this small amount, paid early enough in the mortgage, could offer huge savings in interest and in the duration of the loan.
American Mortgage Advisers, Inc can walk you the mortgage process. Give us a call at 214-865-7442.
Get a New Loan Quote
Looking for a new home loan? Fill out the following form to get a fast quote from us.