Extra Payments Provide Big Mortgage Savings

Paying regular extra payments toward the principal balance will provide big savings. Borrowers use different methods to meet this goal. Paying 1 additional full payment once per year is probably the simplest to keep track of. But many folks won't be able to pull off such an enormous extra expense, so splitting one additional payment into 12 extra monthly payments works as well. Finally, you can commit to paying a half payment every other week. Each option produces different results, but each will significantly reduce the duration 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. But remember that most mortgage contracts will allow additional payments at any time. You can benefit from this provision to pay down your principal when you come into extra money.

If, for example, you were to receive an unexpected windfall just a few years into your mortgage, paying several thousand dollars into your home's principal can shorten the repayment period of your loan and save enormously on interest paid over the life of the mortgage loan. For most loans, even this relatively small amount, paid early in the mortgage, could offer huge savings in interest and duration of the loan.

Firelight Mortgage Consultants can walk you Firelight Mortgage Consultants can answer questions about these interest savings and many others. Call us: (303) 228-2254.

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