Extra Payments Yield Big Savings
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There's a simple trick to reduce the repayment period of your mortgage and save thousands in interest: Make additional payments that apply toward your principal. People pay extra in a few different ways. For many people,Perhaps the simplest way to keep track is by making 1 extra payment a year. Of course, many people can't pull off such an enormous extra payment, so dividing a single additional payment into twelve additional monthly payments works as well. Another very popular option is to pay half of your payment every other week. The result is you make one extra monthly payment every year. Each option yields slightly different results, but they will all significantly reduce the length of your mortgage and lower your total interest paid.
One-time Additional Payment
Some people can't manage extra payments. Remember that almost all mortgage contracts will permit you to make additional payments to your principal at any point during repayment. Any time you get some unexpected cash, consider using this provision to make a one-time additional payment toward your principal.
If, for example, you receive a surprise windfall four years into your mortgage, paying several thousand dollars into your mortgage principal will significantly reduce the duration of your loan and save a huge amount on interest over the duration of the loan. For most loans, even this small amount, paid early enough in the mortgage, could offer huge savings in interest and in the length of the loan.
At Mortgage Affiliates of America, Inc., we answer questions about interest-saving strategies almost every day. Call us at 203-730-4070.
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