Mortgage Savings Tips
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Making regular extra payments on the principal balance can yield big returns. Borrowers can accomplish this using a few different techniques. For many people,Perhaps the simplest way to keep track is to make 1 additional payment a year. If you can't pay an additional whole payment in one month, you can divide that payment by 12 and pay that additional amount monthly. Another very popular option is to pay a half payment every two weeks. The effect here is that you make one extra monthly payment each year. These options differ slightly in reducing the total interest paid and reducing payback length, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.
Lump Sum Extra Payment
It may not be possible for you to pay extra every month or even every year. Remember that virtually all mortgages will permit you to make additional payments to your principal at any time. Any time you get some extra cash, consider using this provision to make an additional one-time payment toward your principal.
If, for example, you were to receive an unexpected windfall four years into your mortgage, investing a few thousand dollars into your home's principal can reduce the duration of your loan and save enormously on mortgage interest paid over the duration of the mortgage loan. For most loans, even a small amount, paid early in the mortgage, could offer huge savings in interest and in the length of the loan.
At Mid America Mortgage Company NMLS 150009, we answer questions about money-saving strategies every day. Call us at (866) 298-0700.