Paying regular additional payments on the loan principal provides singificant returns. Borrowers can pay extra on principal in various ways. For many people,Perhaps the simplest way to keep track is by making 1 extra mortgage payment a year. If you can't pay an extra whole payment all at once, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Another popular option is to pay a half payment every two weeks. The effect here is that you will make one additional monthly payment every year. Each option yields different results, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
Lump Sum Extra Payment
Some borrowers just can't make any extra payments. But remember that most mortgages allow you to make additional principal payments at any time. You can benefit from this provision to pay down your mortgage principal when you get some extra money.
Here's an example: five years after moving into your home, you get a larger than expected tax refund,a very large inheritance, or a cash gift; , investing several thousand dollars into your mortgage principal will reduce the period of your loan and save a huge amount on interest paid over the life of the mortgage loan. For most loans, even this relatively modest amount, paid early enough in the loan period, could offer big savings in interest and duration of the loan.
Washingtonian Mortgage, LLC can walk you the mortgage process. Give us a call: 410-451-2755.