Additional Payments Provide Huge Mortgage Savings
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Making consistent additional payments toward the loan principal yields huge returns. Borrowers can pay against principal in various ways. For many people,Perhaps the easiest way to organize this process is to make 1 additional payment per year. However, some people will not be able to pull off such a large additional payment, so splitting an extra payment into twelve additional monthly payments works too. Another option is to pay half of your payment every other week. The effect here is that you will make one additional monthly payment every year. Each of these options produces different results, but they will all significantly reduce the length of your mortgage and lower the total interest paid over the duration of the loan.
Lump Sum Extra Payment
It may not be possible for you to pay down your principal every month or even every year. Remember that virtually all mortgage contracts will permit you to make additional payments to your principal at any point during repayment. Whenever you come into extra money, you can use this rule to make a one-time additional payment toward your mortgage principal.
If, for example, you receive a large gift or tax refund four years into your mortgage, investing several thousand dollars into your mortgage principal will shorten the repayment period of your loan and save a huge amount on interest paid over the duration of the mortgage loan. Unless the loan is very large, even modest amounts applied early can produce huge benefits over the duration of the loan.
Best Capital Funding can walk you At Best Capital Funding , we answer questions about interest-saving strategies almost every day. Give us a call at 800-506-0632.