Save on Your Mortgage
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There's a simple trick to reduce the repayment period of your mortgage and save you thousands over the course of your loan: Make extra payments that go toward your principal. People use different methods to meet this goal. Paying 1 extra full payment one time every year may be the simplest to arrange. If you can't pay an extra whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Finally, you can commit to paying a half payment every other week. Each of these options yields different results, but they will all significantly reduce the length 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. But you should remember that most mortgage contracts allow you to make additional payments at any time. You can benefit from this provision to pay extra on your principal when you come into extra money.
If, for example, you receive a very large gift or tax refund five years into your mortgage, you could pay this windfall toward your loan principal, resulting 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 produce huge savings over the life of the loan.
At Texas Financial Resource Management, Inc, we answer questions about interest-saving strategies almost every day. Give us a call: (972) 991-6115.