Extra Payments Provide Big Savings
There's a simple trick to reduce the repayment period of your mortgage and save thousands in interest: Make additional payments that are applied toward the principal. Borrowers pay extra on principal in various ways. For many people,Perhaps the easiest way to organize this process is by making 1 additional mortgage payment per year. If you can't pay an additional whole payment in one month, you can divide that payment by 12 and pay that additional amount monthly. Another popular option is to pay a half payment every other week. The effect here is that you make one additional monthly payment each year. Each of these options produces different results, but each will significantly shorten the duration of your mortgage and lower the total interest paid over the duration of the loan.
Additional One-time payment
It may not be possible for you to pay extra every month or even every year. Keep in mind that almost all mortgage contracts will permit you to pay extra on your principal at any time. Any time you come into extra cash, consider using this rule to make a one-time additional payment toward your principal. If, for example, you were to receive a large gift or tax refund just a few years into your mortgage, you could pay this money toward your mortgage loan principal, resulting in huge savings and a shorter loan period. For most loans, even a relatively small amount, paid early in the loan period, could offer huge savings in interest and duration of the loan.
Longhorn Mortgage can walk you Longhorn Mortgage has your mortgage answers. Give us a call at 512-302-9410.
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