Additional Payments Yield Big Savings
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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 additional payments which apply to the loan principal. People use different methods to meet this goal. For many people,Perhaps the simplest way to organize this process is by making one extra payment per year. If you can't pay an extra whole payment all at once, you can split that large amount into 12 smaller payments and pay 1/12 of the monthly amount EACH month. Finally, you can commit to paying half of your mortgage payment every other week through a paid service. This is the same as 1 and 1/12 payment each month but is a formal agreement and therefore might keep you on track when you'd otherwise skip that 1/12 extra. These options differ a little in lowering the final payback amount and shortening payback length, but each will significantly shorten the duration of your mortgage and lower the total interest paid over the life of the loan- may be as much as 9 years.
Additional One-time payment
Some people just can't make any extra payments. But it's important to note that most mortgage contracts will allow additional principal payments at any time. Any time you get some unexpected money, you can use this rule to pay an additional one-time payment on mortgage principal.
For example: several years after moving into your home, you receive a larger than expected tax refund,a large inheritance, or a non-taxable cash gift; , paying a few thousand dollars into your home's principal can shorten the duration of your loan and save enormously on interest over the life of the loan. Unless the mortgage loan is quite large, even a few thousand dollars applied early in the loan period can produce huge benefits over the life of the loan.
Call Ann Jones with questions about making extra monthly payments and how that saves you $$$! (512) 422-9036.
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