Extra Payments Yield Huge Savings
Paying regular extra payments on your principal balance yields big returns. You can accomplish this using a few different techniques. Paying a single additional full payment once every year is likely the simplest to keep track of. Of course, some people can't afford such an enormous additional payment, so dividing a single extra payment into twelve extra monthly payments works too. Finally, you can commit to paying a half payment every two weeks. 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 just can't make extra payments. Keep in mind that most mortgage contracts will permit you to make additional payments to your principal at any point during repayment. Any time you come into unexpected cash, consider using this provision to pay an additional one-time payment on your mortgage principal.
Here's an example: several years after buying your home, you get a very large tax refund,a large legacy, or a cash gift; , paying several thousand dollars into your home's principal can significantly reduce the repayment period of your loan and save a huge amount on interest over the duration of the mortgage loan. For most loans, even this relatively modest amount, paid early enough in the mortgage, could offer big savings in interest and duration of the loan.
American Mortgage Advisers, Inc can walk you American Mortgage Advisers, Inc can answer questions about these interest savings and many others. Call us: 214-865-7442.
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