Extra Payments Provide Big Mortgage Savings
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Making consistent extra payments toward the loan principal yields big returns. Borrowers pay extra on principal in various ways. For many people,Perhaps the easiest way to keep track is to make 1 additional mortgage payment a year. If you can't afford to pay an additional whole payment in one month, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Another option is to pay half of your payment every two weeks. The effect here is that you will make one additional monthly payment each year. These options differ a little in lowering the final payback amount and reducing payback length, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
Additional One-time payment
Some borrowers just can't make any extra payments. But remember that most mortgages will allow additional principal payments at any time. Any time you get some extra cash, you can use this rule to make an additional one-time payment toward principal.
If, for example, you were to receive an unexpected windfall five years into your mortgage, you could pay this windfall toward your mortgage loan principal, resulting in enormous savings and a shortened payback period. Unless the loan is very large, even small amounts applied early can yield huge benefits over the life of the loan.
First Funding has your mortgage answers. Call us at (408) 540-0200.