Additional Payments Provide Big Mortgage Savings

There's a trick to significantly reduce the length of your mortgage and save you thousands of dollars in interest: Make extra payments that go toward your principal. Borrowers make this happen in a few different ways. Paying one extra payment one time per year may be the simplest to track. Of course, some people can't swing this huge extra expense, so dividing a single extra payment into 12 extra monthly payments works as well. Another popular option is to pay half of your payment every other week. The effect here is that you will make one extra monthly payment in a year. These options differ slightly in reducing the final payback amount and shortening payback length, but they will all significantly shorten the length of your mortgage and lower your total interest paid.

Lump Sum Extra Payment

Some people can't manage any extra payments. But remember that most mortgages will allow additional payments at any time. You can benefit from this provision to pay down your mortgage principal when you get some extra money.

If, for example, you were to receive an unexpected windfall five years into your mortgage, you could apply this money toward your loan principal, which would result in huge savings and a shorter loan period. For most loans, even a relatively small amount, paid early in the mortgage, could offer huge savings in interest and in the length of the loan.

Stepping Stone Mortgage can walk you through the pitfalls of getting a mortgage. Call us: 5416833300.