Additional Payments Yield Big Mortgage Savings
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Making regular extra payments toward the principal balance will yield huge savings. Borrowers can accomplish this using a few different techniques. Paying one additional payment one time per year may be the simplest to track. However, some folks will not be able to afford such a large extra payment, so splitting an extra payment into 12 additional monthly payments works too. Finally, you can commit to paying half of your mortgage payment every other week. Each of these options yields slightly different results, but each will significantly shorten the duration of your mortgage and lower the total interest paid over the life of the loan.
Lump Sum Extra Payment
It may not be possible for you to pay extra every month or even every year. Keep in mind that almost all mortgages will allow you to pay extra on your principal at any time. You can take advantage of this rule to pay down your mortgage principal when you come into extra money.
For example: a few years after moving into your home, you receive a very large tax refund,a large legacy, or a cash gift; , you could pay a portion of this money toward your loan principal, resulting in enormous savings and a shorter payback period. For most loans, even this relatively modest amount, paid early enough in the loan period, could offer huge savings in interest and length of the loan.
Dream Home Funding can get you past the pitfalls of getting a mortgage. Give us a call at (325) 651-2100.