Save Big on Your Mortgage
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There's a trick to reduce the repayment period of your mortgage and save you thousands in interest: Make extra payments that are applied to the loan principal. Borrowers can pay extra on principal in many different ways. Making 1 extra payment once per year may be the simplest to keep track of. However, some folks won't be able to pull off such a large extra payment, so dividing a single extra payment into 12 additional monthly payments works too. Finally, you can pay half of your mortgage payment every two weeks. These options differ a little in reducing the final payback amount and shortening payback length, but each will significantly reduce the length of your mortgage and lower the total interest you will pay over the life of the loan.
Lump Sum Extra Payment
Some borrowers just can't make extra payments. But it's important to note that most mortgages allow additional principal payments at any time. You can benefit from this provision to pay down your mortgage principal any time you get some extra money.
Here's an example: five years after moving into your home, you get a huge tax refund,a large legacy, or a non-taxable cash gift; , paying a few thousand dollars into your home's principal can significantly shorten the repayment duration of your loan and save a huge amount on interest over the duration of the mortgage loan. For most loans, even a modest amount, paid early in the mortgage, could offer big savings in interest and duration of the loan.
Southwest Funding can answer questions about these interest savings and many others. Call us at (504) 832-3131.