Save on Your Mortgage
Paying regular extra payments toward the principal will yield singificant savings. People make this happen in a few different ways. Making one extra payment one time every year may be the simplest to track. If you can't 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 a half payment every two weeks. The effect here is that you make one extra monthly payment each year. These options differ slightly in reducing the total interest paid and shortening payback length, but they will all significantly reduce the length of your mortgage and lower your total interest paid.
Additional One-time payment
It may not be possible for you to pay more every month or even every year. But remember that most mortgage contracts will allow additional principal payments at any time. You can benefit from this provision to pay down your principal any time you get some extra money.
Here's an example: a few years after moving into your home, you get a huge tax refund,a large legacy, or a non-taxable cash gift; , paying several thousand dollars into your home's principal will significantly reduce the period of your loan and save enormously on mortgage interest paid over the life of the mortgage loan. For most loans, even this small amount, paid early enough in the mortgage, could offer big savings in interest and in the length of the loan.
Wisdom Financial, Inc. can walk you through the pitfalls of getting a mortgage. Give us a call at 708.499.6088.