Extra Payments Yield Big Mortgage Savings

Paying consistent additional payments on your loan principal yields big savings. Borrowers can accomplish this in various ways. Making 1 extra payment one time every year is perhaps the easiest to track. But many folks will not be able to swing such a large extra payment, so splitting a single additional payment into 12 extra monthly payments works too. Another very popular option is to pay half of your payment every two weeks. The result is you make one additional monthly payment every year. These options differ a little in lowering the final payback amount and shortening payback length, but each will significantly shorten the duration of your mortgage and lower the total interest paid over the duration of the loan.

Lump Sum Extra Payment

Some people just can't make any extra payments. Remember that almost all mortgage contracts will allow you to pay extra on your principal at any point during repayment. Any time you come into extra money, you can use this rule to pay a one-time additional payment on your principal. Here's an example: five years after buying your home, you receive a very large tax refund,a very large inheritance, or a non-taxable cash gift; , investing a few thousand dollars into your mortgage principal will shorten the period of your loan and save enormously on mortgage interest paid over the duration of the loan. Unless the loan is very large, even a few thousand dollars applied early can produce huge savings over the duration of the loan.

Forum Mortgage Bancorp can walk you At Forum Mortgage Bancorp, we answer questions about money-saving strategies every day. Give us a call at (773) 774-9040 Ext 121.

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