Additional Payments Yield Big Mortgage Savings
Making consistent additional payments on the loan principal will provide enormous returns. People pay extra in several ways. Paying one additional payment once per year is probably the easiest to arrange. If you can't afford to pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Finally, you can pay a half payment every other week. 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 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 take advantage of this rule to pay extra on your principal any time you get some extra money. Here's an example: a few years after buying your home, you get a very large tax refund,a very large legacy, or a cash gift; , you could pay a portion of this money toward your loan principal, which would result in significant savings and a shorter payback period. For most loans, even this modest amount, paid early in the loan period, could offer big savings in interest and duration of the loan.
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