Huge Savings on Interest: Available to Anyone
Here's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars over the course of your loan: Make extra payments that apply toward the principal. You can accomplish this in various ways. Making 1 additional full payment one time a year is probably the simplest to keep track of. However, some folks won't be able to pull off such a large additional payment, so splitting an additional payment into twelve extra monthly payments works too. Another very popular option is to pay half of your payment every two weeks. The effect here is that you will make one additional monthly payment every year. Each of these options produces slightly different results, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
Lump Sum Extra Payment
Some people can't manage any extra payments. But you should remember that most mortgage contracts will allow you to make additional principal payments at any time. Whenever you come into extra cash, you can use this rule to make a one-time additional payment toward mortgage principal. If, for example, you receive an unexpected windfall three years into your mortgage, paying several thousand dollars into your home's principal will shorten the repayment duration of your loan and save a huge amount on mortgage interest over the life of the mortgage loan. Unless the mortgage loan is very large, even small amounts applied early in the loan period can produce huge benefits over the life 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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