Extra Payments Yield Big Savings

There's a trick to reduce the repayment period of your mortgage and save you thousands of dollars over the course of your loan: Make extra payments that apply to your principal. You can pay extra on principal by employing various techniques. For many people,Perhaps the easiest way to organize this process is by making 1 extra mortgage payment a year. If you can't pay an additional whole payment in one month, you can divide your payment by 12 and pay that additional amount monthly. Finally, you can commit to paying a half payment every other week. These options differ slightly in lowering the final payback amount and reducing payback length, but they will all significantly shorten the duration of your mortgage and lower the total interest paid over the duration of the loan.

One-time Additional Payment

It may not be possible for you to pay down your principal every month or even every year. Keep in mind that most mortgage contracts will allow you to pay extra on your principal at any time. Whenever you get some unexpected money, consider using this provision to pay a one-time additional payment toward mortgage principal.

For example: several years after moving into your home, you get a larger than expected tax refund,a large legacy, or a non-taxable cash gift; , you could pay a portion of this money toward your loan principal, resulting in enormous savings and a shorter loan period. Unless the loan is quite large, even a few thousand dollars applied early can yield huge savings over the life of the loan.

Metro Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call at 866-300-1550.

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