Additional Payments Provide Big Mortgage Savings
Making consistent extra payments toward the loan principal yields huge returns. Borrowers can accomplish this in several ways. For many people,Perhaps the easiest way to keep track is to make 1 additional mortgage payment every year. But some folks will not be able to afford such an enormous extra expense, so dividing a single extra payment into 12 extra monthly payments is a fine option too. Finally, you can commit to paying half of your mortgage payment every other week. These options differ slightly in lowering the final payback amount and shortening payback length, but each will significantly shorten the length of your mortgage and lower your total interest paid.
Lump Sum Extra Payment
It may not be possible for you to pay more every month or even every year. Keep in mind that virtually all mortgages will permit you to pay extra on your principal at any time. Whenever you come into unexpected money, you can use this rule to pay an additional one-time payment toward mortgage principal.
If, for example, you were to receive an unexpected windfall three years into your mortgage, you could pay this windfall toward your mortgage loan principal, which would result in huge savings and a shortened loan period. Unless the loan is very large, even small amounts applied early in the loan period can produce huge savings over the life of the loan.
Wisdom Financial, Inc. can walk you the mortgage process. Call us at 708.499.6088.