Here’s a simple trick to significantly reduce the length of your mortgage and save thousands of dollars over the course of your loan: Make additional payments which go toward the loan principal. Borrowers make this happen in a few ways. Making 1 additional full payment once a year is likely the simplest to keep track of. If you can’t afford to pay an additional whole payment all at once, you can divide that payment by 12 and pay that additional amount monthly. Finally, you can commit to paying a half payment every two weeks. These options differ slightly in reducing the final payback amount and reducing payback length, but they will all significantly reduce the duration of your mortgage and lower the total interest paid over the duration of the loan.
Additional One-time payment
It may not be possible for you to pay more every month or even every year. Keep in mind that most mortgage contracts will allow you to make additional payments to your principal at any point during repayment. Any time you get some extra money, you can use this provision to make an additional one-time payment on mortgage principal. For example: five years after moving into your home, you receive a larger than expected tax refund,a very large legacy, or a non-taxable cash gift; , investing a few thousand dollars into your home’s principal can significantly reduce the repayment duration of your loan and save a huge amount on interest over the life of the loan. Unless the loan is quite large, even small amounts applied early in the loan period can yield huge savings over the duration of the loan.
Custom Mortgage Services, Inc. can walk you through the pitfalls of getting a mortgage. Give us a call: 678-992-0100.