Here's a simple trick to reduce the repayment period of your mortgage and save you thousands in interest: Make extra payments which are applied to your principal. People pay extra in several ways. Making 1 extra full payment one time every year may be the easiest to arrange. But many people won't be able to swing such a large additional payment, so dividing one additional payment into 12 additional monthly payments works as well. Finally, you can pay half of your mortgage payment every two weeks. These options differ a little in reducing the final payback amount and reducing payback length, but they will all significantly reduce the length of your mortgage and lower your total interest paid.
Additional One-time payment
Some borrowers just can't make extra payments. Remember that most mortgage contracts will permit you to make additional payments to your principal at any time. Any time you come into extra money, you can use this provision to make an additional one-time payment toward principal.
For example: five years after moving into your home, you receive a huge tax refund,a very large legacy, or a non-taxable cash gift; , paying a few thousand dollars into your home's principal will reduce the repayment period of your loan and save a huge amount on mortgage interest paid over the life of the loan. For most loans, even this small amount, paid early enough in the mortgage, could offer big savings in interest and length of the loan.
Saab Mortgage can walk you the mortgage process. Give us a call at 703-288-0777.
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