Mortgage Savings Tips
There's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars over the course of your loan: Make extra payments that apply to your loan principal. You pay against principal by employing various techniques. For many people,Perhaps the easiest way to organize this process is to make 1 extra payment every year. If you can't pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Finally, you can pay a half payment every other week. These options differ slightly in reducing the total interest paid and reducing payback length, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.
Lump Sum Extra Payment
It may not be possible for you to pay extra every month or even every year. Remember that most mortgage contracts will allow you to pay extra on your principal at any time. Any time you come into unexpected money, you can use this provision to make a one-time additional payment toward your mortgage principal.
If, for example, you receive an unexpected 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 loan period. Unless the loan is quite large, even modest amounts applied early can produce huge benefits over the life of the loan.
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