Save Big on Your Mortgage
Paying consistent extra payments on the loan principal yields big returns. Borrowers pay extra in several different ways. Making one additional full payment one time every year is likely the simplest to arrange. However, some folks can't pull off such an enormous extra payment, so dividing an additional payment into 12 additional monthly payments works as well. Another popular option is to pay half of your payment every other week. The effect here is that you make one extra monthly payment each year. Each of these options yields slightly different results, but each will significantly reduce the duration of your mortgage and lower the total interest paid over the duration of the loan.
Lump-sum Additional Payment
Some borrowers can't manage extra payments. Remember that virtually all mortgage contracts will permit you to make additional payments to your principal at any time. You can benefit from this rule to pay extra on your principal when you come into extra money. If, for example, you receive a very large gift or tax refund five years into your mortgage, you could pay a portion of 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 a few thousand dollars applied early in the loan period can produce huge savings over the duration of the loan.
Tenby J. Dahman can walk you the mortgage process. Give us a call at (303) 862-7760.