Additional Payments Provide Big Mortgage Savings

Here's a simple trick to reduce the repayment period 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. Paying a single additional full payment one time a year is probably the easiest to track. But many folks won't be able to pull off this huge extra expense, so dividing a single additional payment into twelve extra monthly payments is a great option too. Finally, you can commit to paying a half payment every other week. Each of these options produces slightly different results, but each will significantly reduce the duration of your mortgage and lower the total interest paid over the duration of the loan.

Lump Sum Extra Payment

It may not be possible for you to pay down your principal every month or even every year. Keep in mind that almost all mortgages will allow you to pay extra on your principal at any point during repayment. You can benefit from this rule to pay down your principal any time you get some extra money. If, for example, you were to receive a very large gift or tax refund three years into your mortgage, paying a few thousand dollars into your home's principal can significantly reduce the period of your loan and save a huge amount on mortgage interest over the life of the loan. Unless the loan is very large, even a few thousand dollars applied early in the loan period can yield huge benefits over the duration 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: (808) 935-0678.

Got a Question?

Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.

Your Information
Your Question