Save on your Mortgage
There's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars over the course of your loan: Make extra payments that go toward the principal. Borrowers can do this in various ways. Making one extra full payment one time per year may be the easiest to keep track of. However, many people won't be able to afford this huge extra payment, so splitting an additional payment into twelve additional monthly payments is a fine option too. Another option is to pay half of your payment every two weeks. The effect here is that you make one extra monthly payment in a year. These options differ a little in reducing the total interest paid and shortening payback length, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Lump-sum Additional Payment
It may not be possible for you to pay extra every month or even every year. But you should remember that most mortgage contracts allow you to make additional payments at any time. Any time you come into extra money, you can use this rule to pay an additional one-time payment toward your principal.
If, for example, you receive an unexpected windfall five years into your mortgage, investing a few thousand dollars into your mortgage principal will shorten the repayment period of your loan and save a huge amount on mortgage interest over the life of the loan. Unless the loan is quite large, even a few thousand dollars applied early in the loan period can produce huge benefits over the life of the loan.
Longhorn Mortgage can walk you the mortgage process. Call us: 512-302-9410.
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