Extra Payments Provide Big Savings

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Here's a simple trick to significantly reduce the length of your mortgage and save you thousands in interest: Make extra payments which go to your loan principal. You can accomplish this in various ways. For many people,Perhaps the simplest way to keep track is by making 1 extra mortgage payment every year. Of course, some folks will not be able to afford such a large extra payment, so splitting one extra payment into 12 extra monthly payments is a great option too. Another option is to pay half of your payment every other week. The effect here is that you make one extra monthly payment every year. Each option produces slightly different results, but each will significantly shorten the duration of your mortgage and lower the total interest you will pay over the duration of the loan.

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 permit you to pay extra on your principal at any time. You can take advantage of this rule to pay down your principal when you come into extra money.

If, for example, you receive a large gift or tax refund five years into your mortgage, paying a few thousand dollars into your home's principal will reduce the repayment duration of your loan and save a huge amount on interest over the life of the loan. For most loans, even a modest amount, paid early in the mortgage, could offer huge savings in interest and length of the loan.

Spooner Financial Services, Inc. can walk you through the pitfalls of getting a mortgage. Give us a call: 8088830740.