Additional Payments Provide Huge Savings
There's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars in interest: Make additional payments that apply toward the loan principal. You can pay against principal by employing various techniques. For many people,Perhaps the simplest way to organize this process is by making one additional payment a year. But some people will not be able to swing such a large additional payment, so splitting one additional payment into 12 extra monthly payments works too. Finally, you can pay a half payment every two weeks. Each of these options yields different results, but they will all significantly shorten the length of your mortgage and lower your total interest paid.
Lump Sum Extra Payment
It may not be possible for you to pay down your principal every month or even every year. Remember that virtually all mortgages will permit you to pay extra on your principal at any time. You can benefit from this rule to pay down your mortgage principal when you get some extra money.
Here's an 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 this windfall toward your loan principal, which would result in enormous savings and a shorter loan period. Unless the loan is very large, even a few thousand dollars applied early can produce huge savings over the duration of the loan.
Howard Financial can walk you Howard Financial can answer questions about these interest savings and many others. Call us: (610) 889-7467.