Big Interest Savings: Available to Anyone
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Making consistent extra payments on your principal balance will yield significant savings. Borrowers make this happen in several different ways. For many people,Perhaps the simplest way to keep track is to make one extra payment per year. If you can't pay an additional whole payment in one month, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another very popular option is to pay a half payment every two weeks. The result is you will make one additional monthly payment every year. These options differ slightly in lowering the total interest paid and shortening payback length, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.
Lump-sum Additional Payment
Some people can't manage any extra payments. But you should remember that most mortgage contracts allow you to make additional payments at any time. Any time you come into unexpected cash, you can use this rule to make a one-time additional payment toward principal. If, for example, you receive a very large gift or tax refund just a few years into your mortgage, you could pay this windfall toward your mortgage loan principal, which would result in significant savings and a shorter payback period. For most loans, even this relatively small amount, paid early enough in the mortgage, could offer big savings in interest and in the length of the loan.
Mason Mortgage Advisors can walk you through the mortgage process. Give us a call: (314) 395-8300.
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