Extra Payments Yield Huge Mortgage Savings

There's a simple trick to reduce the repayment period of your mortgage and save you thousands of dollars in interest: Make additional payments that go toward your principal. People make this happen in several ways. For many people,Perhaps the simplest way to keep track is by making one extra mortgage payment every year. But some folks can't afford such a large extra payment, so dividing an extra payment into 12 additional monthly payments works as well. Another option is to pay a half payment every other week. The result is you will make one extra monthly payment every year. 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.

One-time Additional Payment

It may not be possible for you to pay down your principal every month or even every year. But it's important to note that most mortgages will allow additional principal payments at any time. Whenever you get some extra cash, consider using this provision to pay a one-time additional payment toward mortgage principal. If, for example, you receive an unexpected windfall five years into your mortgage, you could pay this windfall toward your loan principal, resulting in huge savings and a shorter loan period. Unless the mortgage loan is very large, even small amounts applied early in the loan period can produce huge benefits over the duration of the loan.

First Community Bank of Central Al. can walk you the mortgage process. Give us a call: (334) 285-8850.

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