Huge Interest Savings: Available to Anyone with a Mortgage
Here's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars in interest: Make additional payments which go toward your loan principal. Borrowers employ various techniques to accomplish this goal. Paying a single additional full payment one time a year is likely the simplest to keep track of. Of course, some people will not be able to swing such an enormous extra payment, so dividing an additional payment into 12 additional monthly payments works too. Another option is to pay half of your payment every two weeks. The result is you make one extra monthly payment every year. These options differ slightly in reducing the final payback amount and reducing payback length, but they will all 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 down your principal every month or even every year. But you should remember that most mortgages allow additional payments at any time. You can benefit from this rule to pay down your mortgage principal when you come into extra money. If, for example, you receive an unexpected windfall just a few years into your mortgage, paying several thousand dollars into your mortgage principal can significantly reduce the repayment duration of your loan and save enormously on interest over the duration of the loan. Unless the mortgage loan is very large, even small amounts applied early can produce huge savings over the duration of the loan.
Real Property Finance can walk you the mortgage process. Give us a call: 310-379-5997.
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