Big Savings on Interest: Available to Anyone
There's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars in interest: Make additional payments which go to the loan principal. Borrowers use different methods to accomplish this goal. For many people,Perhaps the simplest way to keep track is by making 1 extra mortgage payment a year. Of course, some folks won't be able to swing this huge extra payment, so dividing one extra payment into 12 extra monthly payments is a great option too. Finally, you can commit to paying half of your mortgage payment every two weeks. These options differ a little in reducing the final payback amount and shortening payback length, but they will all significantly reduce the duration of your mortgage and lower the total interest you will pay over the life of the loan.
Additional One-time payment
It may not be possible for you to pay more every month or even every year. But it's important to note that most mortgage contracts allow additional principal payments at any time. Any time you get some unexpected money, consider using this provision to make an additional one-time payment on principal.
For example: a few years after moving into your home, you get a very large tax refund,a very large inheritance, or a non-taxable cash gift; , you could apply a portion of this windfall toward your loan principal, resulting in huge savings and a shortened loan period. For most loans, even this relatively small amount, paid early enough in the mortgage, could offer big savings in interest and in the length of the loan.
Pacific Loan Brokers can walk you the mortgage process. Call us: 877-310-6200.
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