Extra Payments Yield Huge Savings
Paying consistent additional payments on the principal will yield singificant returns. Borrowers can accomplish this in various ways. Paying a single additional payment one time a year may be the simplest to keep track of. If you can't afford to pay an additional whole payment in one month, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Finally, you can commit to paying a half payment every other week. These options differ slightly in reducing the final payback amount 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.
Additional One-time payment
Some borrowers just can't make extra payments. Remember that virtually all mortgage contracts will allow you to pay extra on your principal at any point during repayment. You can take advantage of this provision to pay extra on your mortgage principal when you come into extra money. If, for example, you were to receive an unexpected windfall five years into your mortgage, you could pay this windfall toward your loan principal, which would result in significant savings and a shortened payback period. For most loans, even a small amount, paid early in the loan period, could offer big savings in interest and in the 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. Give us a call at 214-865-7442.
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