Additional Payments Yield Huge Savings
Making consistent extra payments on your loan principal will yield huge returns. You can pay more on principal in many different ways. For many people,Perhaps the simplest way to organize this process is by making 1 additional mortgage payment per year. If you can't afford to pay an additional whole payment in one month, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Another option is to pay a half payment every other week. The result is you make one extra monthly payment each year. Each option yields slightly different results, but each will significantly reduce the length of your mortgage and lower the total interest you will pay over the duration of the loan.
Lump-sum Additional Payment
Some folks just can't make any extra payments. But it's important to note that most mortgage contracts will allow you to make additional payments at any time. Any time you come into unexpected cash, you can use this provision to make a one-time additional payment toward principal. For example: a few years after buying your home, you get a very large tax refund,a large legacy, or a non-taxable cash gift; , you could apply a portion of this windfall toward your loan principal, resulting in enormous savings and a shortened loan period. Unless the loan is quite large, even small amounts applied early can produce huge benefits over the duration of the loan.
Howard Financial can walk you Howard Financial can answer questions about these interest savings and many others. Give us a call at (610) 889-7467.