Simple Ways to Save Big on Your Mortgage
Making consistent additional payments toward the principal yields singificant returns. People employ various techniques to accomplish this goal. For many people,Perhaps the easiest way to keep track is by making 1 additional mortgage payment a year. However, many people will not be able to swing such a large extra expense, so dividing a single additional payment into twelve extra monthly payments is a great option too. Another option is to pay a half payment every other week. The effect here is that you will make one extra monthly payment each year. These options differ slightly in lowering the total interest paid and shortening payback length, but each will 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. Keep in mind that almost all mortgages will permit you to make additional payments to your principal at any time. Whenever you get some unexpected money, consider using this provision to pay an additional one-time payment on principal. If, for example, you were to receive a large gift or tax refund four years into your mortgage, you could pay this windfall toward your loan principal, which would result in enormous savings and a shortened loan period. Unless the loan is quite large, even a few thousand dollars applied early can yield huge savings over the duration of the loan.