Huge Interest Savings: Available to Anyone
Paying consistent additional payments toward the principal balance provides big savings. Borrowers use different methods to accomplish this goal. Paying 1 additional full payment once per year may be the easiest to arrange. If you can't afford to pay an additional whole payment all at once, you can divide your payment by 12 and pay that additional amount monthly. Another popular option is to pay half of your payment every two weeks. The result is you will make one additional monthly payment every year. These options differ slightly in reducing 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.
Lump Sum Extra Payment
It may not be possible for you to pay more every month or even every year. Remember that most mortgages will allow you to make additional payments to your principal at any time. Any time you get some extra money, consider using this rule to pay a one-time additional payment on principal. If, for example, you receive a surprise windfall five years into your mortgage, investing several thousand dollars into your mortgage principal will significantly shorten the repayment duration of your loan and save a huge amount on interest paid over the duration of the loan. For most loans, even this modest amount, paid early in the loan period, could offer huge savings in interest and duration of the loan.
Alternative Mortgage Group can walk you Alternative Mortgage Group can answer questions about these interest savings and many others. Give us a call at 561-395-4264.