Big Interest Savings: Available to Anyone
There's a simple trick to significantly reduce the length of your mortgage and save you thousands in interest: Make additional payments that go toward your principal. Borrowers can pay extra on principal in many different ways. Making a single extra payment once per year is likely the simplest to keep track of. But many people can't swing this huge additional expense, so splitting one extra payment into 12 additional monthly payments works too. Finally, you can pay half of your mortgage payment every two weeks. These options differ slightly in lowering the final payback amount and shortening payback length, but they will all significantly reduce the duration of your mortgage and lower the total interest paid over the life of the loan.
Lump-sum Additional Payment
It may not be possible for you to pay extra every month or even every year. But it's important to note that most mortgage contracts allow you to make additional principal payments at any time. Any time you come into extra cash, consider using this rule to make an additional one-time payment on principal.
For example: a few years after buying your home, you receive a very large tax refund,a large inheritance, or a non-taxable cash gift; , you could apply this windfall toward your mortgage loan principal, which would result in significant savings and a shortened loan period. For most loans, even a relatively small amount, paid early enough in the mortgage, could offer big savings in interest and length of the loan.
Prime Capital Mortgage Corp can walk you through the pitfalls of getting a mortgage. Give us a call at 248-644-1200.
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