Additional Payments Yield Huge Mortgage Savings

There's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars in interest: Make extra payments that are applied toward your loan principal. You can do this in various ways. For many people,Perhaps the easiest way to organize this process is by making 1 additional payment a year. Of course, some people can't afford such an enormous additional expense, so splitting an 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 additional monthly payment each year. These options differ a little in reducing the total interest paid and reducing payback length, but each will significantly shorten the length of your mortgage and lower your total interest paid.

Lump Sum Extra Payment

Some borrowers just can't make any extra payments. Keep in mind that virtually all mortgage contracts will permit you to pay extra on your principal at any time. Any time you get some extra cash, you can use this rule to pay an additional one-time payment toward your mortgage principal. For example: a few years after moving into your home, you receive a huge tax refund,a very large inheritance, or a cash gift; , investing several thousand dollars into your mortgage principal will reduce the period of your loan and save enormously on interest paid over the duration of the mortgage loan. For most loans, even this relatively modest amount, paid early in the mortgage, could offer huge savings in interest and length of the loan.

Statewide Funding can walk you the mortgage process. Give us a call: (415) 456-7802.

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