Additional Payments Yield Big Savings
Paying consistent extra payments toward your principal balance can yield big savings. You can do this in several ways. For many people,Perhaps the easiest way to keep track is by making one additional 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. Finally, you can pay a half payment every two weeks. 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 your total interest paid.
One-time Additional Payment
Some borrowers just can't make any extra payments. Keep in mind that virtually all mortgage contracts will allow you to pay extra on your principal at any point during repayment. Whenever you come into extra money, you can use this rule to make an additional one-time payment on mortgage principal. If, for example, you receive a large gift or tax refund five years into your mortgage, you could pay a portion of this money toward your loan principal, resulting in significant savings and a shorter payback period. For most loans, even a relatively small amount, paid early in the loan period, could offer big savings in interest and length of the loan.
American Mortgage Advisers, Inc can walk you through the pitfalls of getting a mortgage. Give us a call: 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.