Mortgage Savings

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Paying regular extra payments on the loan principal provides enormous returns. Borrowers can do this in several ways. Paying 1 extra full payment one time every year may be the easiest to track. If you can't afford to pay an extra whole payment in one month, you can divide your payment by 12 and write a check for that additional amount monthly. Finally, you can pay half of your mortgage payment every other week. Each of these options produces different results, but they will all significantly reduce the length of your mortgage and lower the total interest paid over the duration of the loan.

Lump-sum Additional Payment

It may not be possible for you to pay extra every month or even every year. Keep in mind that virtually all mortgages will permit you to make additional payments to your principal at any time. You can take advantage of this rule to pay down your mortgage principal when you get some extra money. Here's an example: a few years after moving into your home, you get a larger than expected tax refund,a large legacy, or a cash gift; , paying several thousand dollars into your mortgage principal will shorten the repayment period of your loan and save enormously on mortgage interest over the duration of the mortgage loan. For most loans, even this relatively modest amount, paid early enough in the loan period, could offer big savings in interest and in the duration of the loan.

Joe Bell, mortgage broker, Rapid Mortgage Solutions has your mortgage answers. Give us a call at (727) 527-1454.

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