Extra Payments Yield Big Mortgage Savings
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There's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars over the course of your loan: Make extra payments which are applied to the principal. You can pay extra on principal in many different ways. Paying one extra payment once every year may be the easiest to arrange. If you can't afford to pay an additional whole payment all at once, you can divide that payment by 12 and write a check for that additional amount monthly. Another popular option is to pay half of your payment every two weeks. The effect here is that you will make one extra monthly payment in a year. Each option produces slightly different results, but they will all significantly reduce the duration of your mortgage and lower the total interest you will pay over the duration of the loan.
Lump-sum Additional Payment
It may not be possible for you to pay more every month or even every year. But you should remember that most mortgages allow you to make additional payments at any time. You can benefit from this rule to pay extra on your principal when you come into extra money.
If, for example, you receive a very large gift or tax refund just a few years into your mortgage, investing a few thousand dollars into your home's principal will shorten the repayment duration of your loan and save enormously on mortgage interest paid over the life of the loan. Unless the loan is very large, even small amounts applied early can produce huge savings over the duration of the loan.
Queen City Mortgage can get you past the pitfalls of getting a mortgage. Call us at (513) 796-6022.