January 4th, 2022 11:32 AM by Holly Ecimovic
Our team at Contemporary Mortgage Services, Inc. has come up with some facts for you on how to save money.
Paying consistent additional payments on your loan principal can yield huge returns.
Borrowers can pay against principal by employing various techniques.
For many people, perhaps the easiest way to keep track is to make one additional mortgage payment every year. But some people won't be able to pull off such a large additional payment, so dividing an extra payment into 12 extra monthly payments works, too.
Another very popular option is to pay half of your payment every two weeks. The result is you make one extra monthly payment each year. These options differ a little 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.
Some people just can't make extra payments, but you should remember that most mortgages allow additional payments at any time. You can benefit from this rule to pay down your mortgage principal any time you come into extra money.
For example: five years after buying your home, you get a larger than expected tax refund, a large inheritance, or a non-taxable cash gift; investing a few thousand dollars into your mortgage principal will significantly shorten the repayment duration of your loan and save enormously on interest over the duration of the loan.
For most loans, even this relatively modest amount, paid early in the mortgage, could offer huge savings in interest and duration of the loan.