Additional Payments Provide Big Savings
Making consistent additional payments on the loan principal will provide huge returns. You pay against principal by employing various techniques. Making 1 extra full payment once every year is probably the easiest to track. If you can't pay an additional whole payment in one month, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Another very popular option is to pay half of your payment every two weeks. The result is you make one additional monthly payment every year. These options differ a little in reducing the final payback amount and reducing payback length, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.
Lump Sum Extra Payment
Some people can't manage any extra payments. Keep in mind that most mortgages will permit you to make additional payments to your principal at any time. You can benefit from this rule to pay extra on your mortgage principal any time you come into extra money.
If, for example, you were to receive a surprise windfall five years into your mortgage, you could apply this windfall toward your loan principal, resulting in enormous savings and a shortened loan period. Unless the loan is quite large, even modest amounts applied early can yield huge benefits over the life of the loan.
Crown Mortgage can walk you Crown Mortgage can answer questions about these interest savings and many others. Call us: (434) 975-5626.
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