Additional Payments Provide Big Mortgage Savings

There's a simple trick to significantly reduce the length of your mortgage and save you thousands in interest: Make additional payments which are applied to the principal. Borrowers accomplish this goal in several different ways. Making a single extra payment one time a year is probably the easiest to arrange. If you can't pay an additional 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 other week. Each option yields slightly different results, but each will significantly reduce the duration of your mortgage and lower your total interest paid.

Lump Sum Extra Payment

Some people just can't make any extra payments. But remember that most mortgages allow you to make additional payments at any time. You can take advantage of this provision to pay extra on your principal when you get some extra money.

If, for example, you receive a large gift or tax refund four years into your mortgage, investing a few thousand dollars into your home's principal will reduce the period of your loan and save enormously on mortgage interest over the duration of the loan. Unless the mortgage loan is very large, even small amounts applied early can yield huge savings over the duration of the loan.

Abundance Home Mortgage can walk you Abundance Home Mortgage has your mortgage answers. Give us a call at (512) 335-7800.

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