Simple Ways to Save on Your Mortgage
Paying regular extra payments toward your principal balance can yield enormous returns. Borrowers pay more on principal in many different ways. Making 1 extra full payment once per year is perhaps the easiest to arrange. However, some people can't pull off such an enormous additional payment, so splitting one extra payment into twelve additional monthly payments is a fine option too. Finally, you can pay a half payment every two weeks. Each option produces different results, but they will all significantly shorten 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 extra every month or even every year. But you should remember that most mortgage contracts will allow you to make additional principal payments at any time. Whenever you come into unexpected cash, you can use this provision to pay a one-time additional payment on your principal. If, for example, you receive an unexpected windfall just a few years into your mortgage, you could apply a portion of this windfall toward your loan principal, which would result in enormous savings and a shortened payback period. For most loans, even this modest amount, paid early in the mortgage, could offer big savings in interest and in the duration of the loan.
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