Additional Payments Provide Big Mortgage Savings
Here's a simple trick to significantly reduce the length of your mortgage and save you thousands in interest: Make extra payments that apply toward your principal. People accomplish this goal in a few different ways. Paying 1 extra payment one time a year may be the simplest to arrange. If you can't afford to pay an extra whole payment in one month, you can divide that payment by 12 and write a check for that additional amount monthly. Another very popular option is to pay half of your payment every two weeks. The effect here is that you make one extra monthly payment every year. These options differ slightly in reducing the final payback amount and shortening payback length, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
One-time Additional Payment
It may not be possible for you to pay more every month or even every year. But remember that most mortgage contracts allow you to make additional payments at any time. You can take advantage of this provision to pay extra on your mortgage principal any time you get some extra money.
Here's an example: five years after buying your home, you receive a larger than expected tax refund,a very large inheritance, or a non-taxable cash gift; , you could apply this windfall toward your mortgage loan principal, which would result in significant savings and a shorter payback period. Unless the mortgage loan is quite large, even a few thousand dollars applied early in the loan period can yield huge benefits over the life of the loan.
Coastal Mortgage Corp. can walk you the mortgage process. Call us: 504-866-5626.
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