Simple Ways to Save Big on Your Mortgage
There's a trick to reduce the repayment period of your mortgage and save you thousands of dollars in interest: Make extra payments that apply to the loan principal. Borrowers employ various techniques to meet this goal. For many people,Perhaps the simplest way to keep track is by making 1 extra mortgage payment every year. If you can't afford to pay an additional whole payment in one month, you can divide your payment by 12 and write a check for that additional amount monthly. Another option is to pay half of your payment every two weeks. The effect here is that you will make one additional monthly payment every year. Each option produces different results, but each will significantly shorten the length of your mortgage and lower the total interest you will pay over the life of the loan.
Lump Sum Extra Payment
Some folks can't manage any extra payments. But it's important to note that most mortgages allow you to make additional payments at any time. Whenever you get some unexpected cash, consider using this rule to make a one-time additional payment on your principal.
If, for example, you receive an unexpected windfall five years into your mortgage, you could apply this money toward your loan principal, resulting in significant savings and a shorter payback period. Unless the loan is quite large, even small amounts applied early in the loan period can yield huge benefits over the life of the loan.
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