Extra Payments Provide Big Savings

There's a 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 using a few different techniques. Making one extra full payment one time a year may be the simplest to track. If you can't afford to pay an additional whole payment all at once, you can divide your payment by 12 and write a check for that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every two weeks. 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 your total interest paid.

Lump Sum Extra Payment

It may not be possible for you to pay more every month or even every year. But it's important to note that most mortgage contracts will allow you to make additional payments at any time. You can benefit from this rule to pay extra on your mortgage principal any time you come into extra money.

Here's an example: several years after moving into your home, you receive a larger than expected tax refund,a large legacy, or a non-taxable cash gift; , paying a few thousand dollars into your home's principal can reduce the duration of your loan and save enormously on mortgage interest paid over the life of the loan. Unless the mortgage loan is very large, even small amounts applied early in the loan period can yield huge savings over the duration of the loan.

First Community Bank of Central Al. can walk you First Community Bank of Central Al. has your mortgage answers. Call us at (334) 285-8850.

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