Additional Payments Provide Big Savings
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Paying consistent additional payments toward the principal balance can yield huge savings. Borrowers can accomplish this using a few different techniques. Making a single extra payment one time a year may be the simplest to keep track of. If you can't pay an additional whole payment in one month, you can divide your payment by 12 and write a check for that additional amount monthly. Another option is to pay half of your payment every other week. The result is you will make one additional monthly payment in a year. Each of these options yields different results, but each will significantly shorten the duration of your mortgage and lower the total interest you will pay over the life of the loan.
Lump-sum Additional Payment
Some folks just can't make any extra payments. Keep in mind that virtually all mortgages will allow you to pay extra on your principal at any point during repayment. You can take advantage of this provision to pay down your principal when you come into extra money.
For example: five years after buying your home, you get a huge tax refund,a large legacy, or a cash gift; , you could pay a portion of this money toward your mortgage loan principal, resulting in significant savings and a shortened loan period. Unless the mortgage loan is very large, even small amounts applied early can yield huge savings over the life of the loan.
Sublime Financial, LLC can answer questions about these interest savings and many others. Give us a call at 214-396-3650.