Extra Payments Yield Huge Savings

There's a simple trick to reduce the repayment period of your mortgage and save you thousands over the course of your loan: Make extra payments which go to the principal. Borrowers pay extra in several ways. For many people,Perhaps the easiest way to organize this process is by making one additional mortgage payment a year. If you can't afford to pay an additional whole payment in one month, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every two weeks. Each option produces different results, but they will all significantly shorten the length of your mortgage and lower your total interest paid.

Lump Sum Extra Payment

Some people just can't make any extra payments. Keep in mind that most mortgage contracts will permit you to pay extra on your principal at any time. You can benefit from this rule to pay down your mortgage principal any time you get some extra money.

If, for example, you were to receive a surprise windfall three years into your mortgage, investing a few thousand dollars into your home's principal will significantly reduce the repayment period of your loan and save enormously on mortgage interest paid over the life of the mortgage loan. Unless the mortgage loan is very large, even a few thousand dollars applied early in the loan period can yield huge savings over the duration of the loan.

Stepping Stone Mortgage can walk you through the pitfalls of getting a mortgage. Call us at (541) 683-3300.

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