Mortgage Savings Tips
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There's a simple trick to reduce the repayment period of your mortgage and save you thousands in interest: Make additional payments that are applied toward your loan principal. People accomplish this goal in several different ways. Making 1 extra full payment one time a year may be the easiest to keep track of. Of course, some people won't be able to swing such an enormous additional expense, so dividing a single extra payment into twelve extra monthly payments works too. Another option is to pay a half payment every two weeks. The effect here is that you make one additional monthly payment every year. Each option yields slightly different results, but they will all significantly reduce the length of your mortgage and lower the total interest you will pay over the life of the loan.
One-time Additional Payment
Some people just can't make extra payments. Keep in mind that most mortgages will allow you to make additional payments to your principal at any point during repayment. Whenever you come into extra money, you can use this provision to make an additional one-time payment toward mortgage principal.
For example: several years after moving into your home, you get a very large tax refund,a large inheritance, or a non-taxable cash gift; , you could pay a portion of this windfall toward your loan principal, resulting in significant savings and a shortened loan period. Unless the loan is very large, even a few thousand dollars applied early can yield huge benefits over the life of the loan.