Making consistent extra payments toward the loan principal will provide big savings. Borrowers employ various techniques to meet this goal. For many people,Perhaps the simplest way to keep track is by making one additional payment per year. But some people can't afford this huge additional expense, so splitting one extra payment into 12 additional monthly payments works too. Finally, you can pay a half payment every other week. Each option produces slightly different results, but they will all significantly shorten the length of your mortgage and lower your total interest paid.
Lump-sum Additional Payment
Some borrowers just can't make any extra payments. But you should remember that most mortgages allow you to make additional payments at any time. Whenever you come into extra money, you can use this rule to pay a one-time additional payment on your principal.
If, for example, you receive a very large gift or tax refund five years into your mortgage, investing a few thousand dollars into your mortgage principal can significantly reduce the period of your loan and save enormously on interest paid over the life of the loan. Unless the loan is quite large, even modest amounts applied early in the loan period can produce huge savings over the life of the loan.
Crown Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call: (434) 975-5626.
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