Save Big on Your Mortgage
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There's a trick to reduce the repayment period of your mortgage and save thousands of dollars over the course of your loan: Make extra payments that apply to your loan principal. Borrowers use different methods to meet this goal. Paying 1 additional payment one time per year is likely the easiest to keep track of. But many folks can't pull off such a large additional expense, so dividing a single additional payment into 12 extra monthly payments is a great option too. Finally, you can pay half of your mortgage payment every two weeks. Each option yields slightly different results, but each will significantly shorten the duration of your mortgage and lower the total interest you will pay over the life of the loan.
Additional One-time payment
It may not be possible for you to pay down your principal every month or even every year. But you should remember that most mortgages allow additional payments at any time. You can benefit from this rule to pay down your mortgage principal when you get some extra money. If, for example, you receive a very large gift or tax refund four years into your mortgage, you could apply a portion of this windfall toward your loan principal, which would result in huge savings and a shortened payback period. For most loans, even this small amount, paid early in the mortgage, could offer huge savings in interest and in the length of the loan.
Star Mortgage ® can walk you Star Mortgage ® has your mortgage answers. Give us a call: 1 800 693-0001.