Big Interest Savings: Available to Anyone
Here's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars in interest: Make extra payments which are applied toward the principal. People pay extra in several ways. For many people,Perhaps the easiest way to organize this process is by making one extra mortgage payment a year. But many folks won't be able to pull off this huge extra expense, so splitting a single additional payment into twelve extra monthly payments is a fine option too. Another option is to pay half of your payment every other week. The result is you make one extra monthly payment in a year. These options differ a little in lowering the total interest paid and shortening payback length, but they will all significantly shorten the length of your mortgage and lower the total interest paid over the life of the loan.
Lump-sum Additional Payment
Some borrowers can't manage extra payments. But remember that most mortgages allow additional payments at any time. Any time you get some extra money, you can use this rule to make a one-time additional payment on principal.
For example: five years after moving into your home, you receive a very large tax refund,a very large legacy, or a cash gift; , paying a few thousand dollars into your home's principal will significantly shorten the repayment period of your loan and save a huge amount on interest over the duration of the mortgage loan. Unless the mortgage loan is quite large, even modest amounts applied early in the loan period can yield huge savings over the duration of the loan.
Ward Kilduff Mortgage can walk you through the pitfalls of getting a mortgage. Call us at (860) 658-7100.
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