Simple Ways to Save on Your Mortgage

There's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars over the course of your loan: Make extra payments that go to the loan principal. You can pay more on principal in various ways. Making 1 additional full payment once a year may be the easiest to arrange. However, many folks won't be able to afford this huge extra payment, so splitting a single additional payment into twelve extra monthly payments is a fine option too. Finally, you can commit to paying a half payment every two weeks. These options differ a little in lowering the total interest paid and reducing payback length, but they will all significantly shorten the duration of your mortgage and lower the total interest paid over the life of the loan.

One-time Additional Payment

Some folks can't manage extra payments. But it's important to note that most mortgage contracts will allow additional principal payments at any time. You can take advantage of this rule to pay extra on your principal when you come into extra money. If, for example, you were to receive a very large gift or tax refund three years into your mortgage, you could apply this money toward your mortgage loan principal, which would result in significant savings and a shortened payback period. For most loans, even a modest amount, paid early enough in the mortgage, could offer huge savings in interest and in the length of the loan.

Firelight Mortgage Consultants can walk you through the pitfalls of getting a mortgage. Call us at (303) 228-2254.

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