Big Interest Savings: Available to Anyone

Making consistent additional payments toward your loan principal provides enormous returns. Borrowers can accomplish this using a few different techniques. For many people,Perhaps the simplest way to keep track is to make one extra payment every year. But many folks can't swing such an enormous additional expense, so dividing an extra payment into twelve additional monthly payments works too. Another popular option is to pay a half payment every two weeks. The effect here is that you will make one additional monthly payment every year. Each of these options yields different results, but each will significantly shorten the duration of your mortgage and lower your total interest paid.

Lump Sum Extra Payment

It may not be possible for you to pay more every month or even every year. Remember that almost all mortgages will permit you to make additional payments to your principal at any point during repayment. Any time you come into unexpected cash, consider using this rule to pay a one-time additional payment on principal. Here's an example: a few years after buying your home, you receive a huge tax refund,a large inheritance, or a cash gift; , investing a few thousand dollars into your home's principal will reduce the repayment duration of your loan and save enormously on mortgage interest paid over the life of the loan. Unless the mortgage loan is very large, even a few thousand dollars applied early can yield huge benefits over the duration of the loan.

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