Extra Payments Yield Big Mortgage Savings
There's a trick to significantly reduce the length of your mortgage and save thousands of dollars over the course of your loan: Make extra payments that are applied toward your loan principal. People employ various techniques to accomplish this goal. For many people,Perhaps the simplest way to organize this process is by making 1 additional mortgage payment every year. Of course, many people can't afford such an enormous additional payment, so dividing one additional payment into 12 additional monthly payments works as well. Another popular option is to pay half of your payment every other week. The effect here is that you will make one additional monthly payment every year. These options differ a little in lowering the total interest paid and reducing payback length, but each will significantly reduce the duration 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 down your principal every month or even every year. Remember that almost 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 any time you get some extra money. If, for example, you receive a large gift or tax refund just a few years into your mortgage, investing several thousand dollars into your home's principal can reduce the period of your loan and save a huge amount on interest paid over the duration of the mortgage loan. For most loans, even this modest amount, paid early in the loan period, could offer big savings in interest and duration of the loan.
Omni Mortgage Company, Inc. can walk you Omni Mortgage Company, Inc. can answer questions about these interest savings and many others. Give us a call at 603-893-6616.