Extra Payments Yield Huge Savings
Paying regular additional payments toward the principal can yield big returns. You pay extra on principal in many different ways. For many people,Perhaps the simplest way to keep track is to make one additional mortgage payment a year. If you can't afford to pay an extra whole payment in one month, you can divide your payment by 12 and pay that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every two weeks. These options differ slightly in reducing the total interest paid and reducing payback length, but each will significantly reduce the length of your mortgage and lower your total interest paid.
Additional One-time payment
Some borrowers just can't make extra payments. Keep in mind that almost all mortgages will permit you to make additional payments to your principal at any time. Whenever you come into extra cash, consider using this rule to pay a one-time additional payment on your principal.
If, for example, you were to receive a very large gift or tax refund just a few years into your mortgage, investing a few thousand dollars into your home's principal can significantly shorten the repayment period of your loan and save enormously on mortgage interest over the life of the loan. For most loans, even this modest amount, paid early in the loan period, could offer huge savings in interest and duration of the loan.
Family Mortgage Company of Hawaii, Inc. NMLS #244497 can walk you the mortgage process. Call us at (808) 935-0678.
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