Extra Payments Yield Huge Mortgage Savings
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Here's a simple trick to significantly reduce the length of your mortgage and save thousands in interest: Make additional payments that go toward your principal. Borrowers employ various techniques to meet this goal. For many people,Perhaps the simplest way to organize this process is by making 1 additional mortgage payment per year. But many people can't pull off this huge extra expense, so splitting an additional payment into twelve additional monthly payments works too. Another option is to pay a half payment every other week. The effect here is that you make one extra monthly payment each year. Each option yields different results, but each will significantly reduce 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 will allow additional payments at any time. Whenever you get some extra money, consider using this provision to pay a one-time additional payment toward your mortgage principal.
If, for example, you receive an unexpected windfall five years into your mortgage, you could apply a portion of this windfall toward your mortgage loan principal, which would result in significant savings and a shorter payback period. Unless the mortgage loan is very large, even a few thousand dollars applied early can yield huge benefits over the duration of the loan.
At American Pacific Mortgage, we answer questions about money-saving strategies every day. Call us at (209) 357-7000.