Extra Payments Provide Huge Mortgage Savings
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There's a trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make extra payments which are applied toward your loan principal. You can pay more on principal in many different ways. Paying a single additional payment one time every year is likely the easiest to arrange. Of course, some people can't swing such a large extra expense, so splitting an extra payment into 12 additional monthly payments works as well. Finally, you can pay half of your mortgage payment every other week. Each option yields different results, but each will significantly shorten the length of your mortgage and lower the total interest you will pay over the life of the loan.
Lump Sum Extra Payment
It may not be possible for you to pay more every month or even every year. Keep in mind that virtually all mortgage contracts will permit you to pay extra on your principal at any point during repayment. You can take advantage of this provision to pay down your principal any time you come into extra money.
For example: several years after moving into your home, you receive a huge tax refund,a large inheritance, or a non-taxable cash gift; , you could pay this windfall toward your mortgage loan principal, resulting in enormous savings and a shortened loan period. Unless the mortgage loan is very large, even a few thousand dollars applied early can yield huge benefits over the duration of the loan.