Additional Payments Yield Huge Mortgage Savings

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There's a trick to reduce the repayment period of your mortgage and save thousands in interest: Make extra payments which go toward the loan principal. Borrowers can pay against principal by employing various techniques. For many people,Perhaps the easiest way to organize this process is by making 1 extra payment per year. But some folks won't be able to pull off this huge extra expense, so dividing an additional payment into twelve extra monthly payments works too. Another option is to pay half of your payment every two weeks. The result is you will make one additional monthly payment every year. These options differ slightly in reducing the total interest paid and reducing payback length, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.

Lump Sum Extra Payment

Some people can't manage extra payments. Remember that almost all mortgage contracts will allow you to pay extra on your principal at any point during repayment. Any time you come into extra money, consider using this provision to pay an additional one-time payment toward principal. For example: a few years after moving into your home, you receive a larger than expected tax refund,a large legacy, or a non-taxable cash gift; , investing a few thousand dollars into your home's principal can significantly shorten the duration of your loan and save a huge amount on interest paid over the duration of the mortgage loan. Unless the loan is very large, even a few thousand dollars applied early in the loan period can produce huge benefits over the duration of the loan.

First Equity can answer questions about these interest savings and many others.