Making consistent extra payments on the principal can yield singificant returns. You pay against principal in many different ways. For many people,Perhaps the easiest way to keep track is by making 1 additional mortgage payment every year. Of course, some folks won't be able to swing such an enormous extra payment, so splitting a single additional payment into 12 extra monthly payments works too. Finally, you can pay a half payment every other week. These options differ a little in lowering the total interest paid and reducing payback length, but they will all significantly shorten the duration of your mortgage and lower the total interest paid over the life of the loan.
One-time Additional Payment
It may not be possible for you to pay more every month or even every year. Remember that virtually all mortgages will allow you to pay extra on your principal at any point during repayment. Any time you get some unexpected cash, you can use this provision to make a one-time additional payment on your mortgage principal. Here's an example: five years after moving into your home, you receive a very large tax refund,a large legacy, or a non-taxable cash gift; , you could apply this money toward your loan principal, resulting in huge savings and a shorter payback period. Unless the mortgage loan is very large, even small amounts applied early can yield huge benefits over the duration of the loan.
Contemporary Mortgage Services, Inc can walk you through the pitfalls of getting a mortgage. Call us at 407-834-3377.
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