Extra Payments Yield Huge Mortgage Savings
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Here's a simple trick to significantly reduce the length of your mortgage and save thousands in interest: Make extra payments which are applied to your principal. You can accomplish this in various ways. For many people,Perhaps the easiest way to organize this process is to make 1 extra mortgage payment per year. If you can't pay an additional whole payment in one month, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every two weeks. These options differ slightly in lowering the final payback amount and reducing payback length, but they will all significantly reduce the length of your mortgage and lower the total interest you will pay over the duration of the loan.
Lump-sum Additional Payment
It may not be possible for you to pay down your principal every month or even every year. But you should remember that most mortgages allow you to make additional principal payments at any time. Any time you come into extra cash, you can use this provision to make a one-time additional payment toward mortgage principal.
If, for example, you were to receive a very large gift or tax refund four years into your mortgage, you could pay a portion of this windfall toward your mortgage loan principal, resulting in huge savings and a shorter payback period. For most loans, even a modest amount, paid early enough in the loan period, could offer huge savings in interest and length of the loan.
Mortgage Solutions of Central Florida, Inc. can answer questions about these interest savings and many others. Give us a call at (407) 294-4707.