Additional Payments Yield Huge Savings
Here's a simple trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make additional payments which are applied to the loan principal. You can do this in various ways. Paying a single additional full payment once per year is perhaps the simplest to keep track of. Of course, many people will not be able to swing this huge additional expense, so dividing an additional payment into 12 additional monthly payments works as well. Another option is to pay half of your payment every other week. The result is you make one additional monthly payment in a year. These options differ a little in lowering the total interest paid and reducing payback length, but each will significantly shorten the length of your mortgage and lower the total interest paid over the life of the loan.
One-time Additional Payment
It may not be possible for you to pay extra every month or even every year. Remember that almost all mortgages will permit you to pay extra on your principal at any point during repayment. You can take advantage of this provision to pay down your mortgage principal when you come into extra money. Here's an example: five years after buying your home, you receive a huge tax refund,a very large inheritance, or a cash gift; , you could pay this windfall toward your loan principal, resulting in enormous savings and a shorter payback period. For most loans, even a modest amount, paid early enough in the loan period, could offer huge savings in interest and in the length of the loan.
Omni Mortgage Company, Inc. can walk you through the pitfalls of getting a mortgage. Give us a call at 603-893-6616.