Additional Payments Yield Big Savings
Paying consistent extra payments toward the principal balance can yield huge returns. Borrowers can accomplish this in several ways. Making one additional full payment one time per year may be the easiest to arrange. Of course, many people can't pull off such an enormous extra expense, so splitting an extra payment into twelve extra monthly payments works as well. Another popular option is to pay half of your payment every other week. The effect here is that you make one extra monthly payment in a year. These options differ a little in lowering the total interest paid and shortening payback length, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.
One-time Additional Payment
Some people just can't make extra payments. But remember that most mortgage contracts allow additional payments at any time. Whenever you get some unexpected money, consider using this provision to pay an additional one-time payment toward your mortgage principal.
If, for example, you receive an unexpected windfall three years into your mortgage, you could pay a portion of this windfall toward your mortgage loan principal, which would result in significant savings and a shorter payback period. Unless the loan is very large, even modest amounts applied early can yield huge benefits over the duration of the loan.
Alternative Mortgage Group can walk you At Alternative Mortgage Group, we answer questions about money-saving strategies almost every day. Give us a call at 561-395-4264.