Save on Your Mortgage
Paying consistent extra payments toward your loan principal will provide enormous returns. Borrowers pay against principal by employing various techniques. Making a single extra payment one time a year is probably the easiest to keep track of. Of course, many people will not be able to afford this huge extra payment, so splitting a single extra payment into 12 extra monthly payments works too. Another very popular option is to pay half of your payment every two weeks. The effect here is that you make one additional monthly payment each year. These options differ slightly in reducing the final payback amount and shortening payback length, but they will all significantly shorten the length of your mortgage and lower the total interest you will pay over the duration of the loan.
Lump Sum Extra Payment
It may not be possible for you to pay extra every month or even every year. But remember that most mortgages will allow you to make additional payments at any time. You can benefit from this rule to pay extra on your principal when you come into extra money. Here's an example: several years after buying your home, you get a very large tax refund,a very large inheritance, or a non-taxable cash gift; , you could pay a portion of this windfall toward your mortgage loan principal, which would result in huge savings and a shortened payback period. Unless the loan is quite large, even a few thousand dollars applied early in the loan period can yield huge savings over the duration of the loan.
MortgageMax can walk you through the pitfalls of getting a mortgage. Give us a call: (303) 443-5566.
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