Additional Payments Yield Huge Mortgage Savings

There's a trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make additional payments that are applied toward the principal. Borrowers employ various techniques to accomplish this goal. Making one additional payment one time every year is probably the easiest to track. But some people won't be able to pull off such a large extra payment, so splitting one extra payment into twelve extra monthly payments works as well. Another popular option is to pay a half payment every other week. The result is you make one additional monthly payment each year. These options differ a little in reducing the total interest paid and reducing payback length, but they will all significantly shorten the length of your mortgage and lower the total interest paid over the life of the loan.

Lump Sum Extra Payment

Some people just can't make any extra payments. Remember that virtually all mortgage contracts will permit you to pay extra on your principal at any point during repayment. Any time you come into unexpected money, consider using this rule to make a one-time additional payment toward mortgage principal.

For example: a few years after buying your home, you receive a huge tax refund,a very large inheritance, or a cash gift; , paying a few thousand dollars into your mortgage principal can significantly reduce the repayment period of your loan and save enormously on mortgage interest over the duration of the loan. Unless the mortgage loan is very large, even modest amounts applied early in the loan period can yield huge savings over the life of the loan.

Family Mortgage Company of Hawaii, Inc. NMLS #244497 can walk you through the pitfalls of getting a mortgage. Give us a call at (808) 935-0678.