Extra Payments Provide Big Mortgage Savings

Making regular additional payments on the loan principal can yield huge returns. Borrowers pay more on principal in various ways. Making a single additional full payment once a year may be the simplest to keep track of. If you can't pay an extra whole payment in one month, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every two weeks. These options differ a little in reducing the total interest paid and shortening payback length, but each will significantly reduce the length of your mortgage and lower your total interest paid.

Lump-sum Additional Payment

Some people just can't make any extra payments. Remember that virtually all mortgages will permit you to make additional payments to your principal at any point during repayment. Whenever you come into extra money, consider using this rule to make an additional one-time payment on mortgage principal. For example: a few years after buying your home, you receive a huge tax refund,a large legacy, or a cash gift; , paying several thousand dollars into your mortgage principal will significantly shorten the period of your loan and save a huge amount on mortgage interest paid over the life of the mortgage loan. For most loans, even this relatively small amount, paid early enough in the mortgage, could offer huge savings in interest and in the duration of the loan.

Abundance Home Mortgage can walk you Abundance Home Mortgage can answer questions about these interest savings and many others. Give us a call at (512) 335-7800.

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