There's a trick to significantly reduce the length of your mortgage and save thousands of dollars over the course of your loan: Make additional payments that are applied toward your principal. Borrowers accomplish this goal in several ways. For many people,Perhaps the simplest way to organize this process is to make one extra payment every year. However, some people will not be able to pull off such a large extra payment, so splitting a single extra payment into twelve additional monthly payments works too. Finally, you can pay a half payment every other week. These options differ slightly in lowering the final payback amount and shortening payback length, but they will all significantly reduce the length of your mortgage and lower the total interest you will pay over the duration of the loan.
Lump-sum Additional Payment
Some borrowers can't manage extra payments. Keep in mind that almost all mortgage contracts will permit you to pay extra on your principal at any time. Whenever you come into extra cash, you can use this rule to make a one-time additional payment on principal. If, for example, you were to receive a large gift or tax refund four years into your mortgage, you could pay a portion of this windfall toward your mortgage loan principal, resulting in enormous savings and a shorter payback period. For most loans, even a relatively modest amount, paid early enough in the mortgage, could offer huge savings in interest and length of the loan.
Prime Capital Mortgage Corp can walk you Prime Capital Mortgage Corp has your mortgage answers. Call us at 248-644-1200.
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