Additional Payments Provide Big Savings
There's a trick to significantly reduce the length of your mortgage and save thousands of dollars in interest: Make extra payments that are applied toward your loan principal. People use different methods to accomplish this goal. For many people,Perhaps the simplest way to organize this process is to make 1 extra payment every year. If you can't pay an extra whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another popular option is to pay a half payment every other week. The effect here is that you will make one additional monthly payment each year. Each option produces slightly different results, but each will significantly shorten 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 it's important to note that most mortgage contracts will allow you to make additional principal payments at any time. You can benefit from this provision to pay extra on your mortgage principal when you get some extra money. Here's an example: a few years after buying your home, you receive a huge tax refund,a large inheritance, or a cash gift; , you could pay this money toward your mortgage loan principal, resulting in huge savings and a shorter loan period. Unless the mortgage loan is very large, even a few thousand dollars applied early in the loan period can produce huge savings over the duration of the loan.
Contemporary Mortgage Services, Inc can walk you Contemporary Mortgage Services, Inc can answer questions about these interest savings and many others. Call us at 407-834-3377.
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