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Extra Payments Provide Big Mortgage Savings

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There's a trick to reduce the repayment period of your mortgage and save thousands over the course of your loan: Make additional payments that go toward the loan principal. Borrowers pay extra on principal in many different ways. For many people,Perhaps the simplest way to keep track is to make one extra payment every year. If you can't afford to pay an additional whole payment all at once, you can divide that payment by 12 and pay that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every two weeks. Each option yields different results, but each will significantly reduce the duration of your mortgage and lower the total interest you will pay over the duration of the loan.

Additional One-time payment

It may not be possible for you to pay extra every month or even every year. But you should remember that most mortgage contracts allow additional principal payments at any time. You can take advantage of this rule to pay extra on your principal any time you get some extra money.

For example: five years after buying your home, you get a very large tax refund,a large legacy, or a non-taxable cash gift; , paying several thousand dollars into your mortgage principal can significantly reduce the repayment period of your loan and save enormously on interest over the duration of the loan. For most loans, even a relatively small amount, paid early enough in the mortgage, could offer huge savings in interest and in the length of the loan.

At Statewide Residential Mortgage Lending, we answer questions about interest-saving strategies almost every day. Give us a call at 214-532-4014.