Paying regular extra payments toward the loan principal yields big savings. You can pay extra on principal in many different ways. Making one additional full payment once a year is probably the simplest to keep track of. If you can't afford to pay an extra whole payment all at once, you can divide that payment by 12 and pay that additional amount monthly. Finally, you can pay a half payment every other week. Each of these options produces different results, but each will significantly reduce the duration of your mortgage and lower the total interest you will pay over the life of the loan.
Lump-sum Additional Payment
Some borrowers can't manage any extra payments. But remember that most mortgages allow you to make additional payments at any time. Whenever you get some unexpected money, consider using this provision to make a one-time additional payment on principal. If, for example, you were to receive a surprise windfall just a few years into your mortgage, you could pay this windfall toward your mortgage loan principal, which would result in enormous savings and a shorter payback period. Unless the loan is quite large, even a few thousand dollars applied early in the loan period can yield huge savings over the duration of the loan.
Mario Vega can walk you Mario Vega can answer questions about these interest savings and many others. Give us a call at 877-310-6200.
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