Additional Payments Yield Big Savings

Making consistent additional payments on the principal yields big savings. You pay more on principal in many different ways. For many people,Perhaps the simplest way to keep track is by making 1 additional payment a year. If you can't afford to pay an additional whole payment in one month, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Another option is to pay a half payment every two weeks. The result is you will make one additional monthly payment each year. These options differ a little in reducing the total interest paid and shortening payback length, but they will all significantly reduce the duration 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. Keep in mind that almost all mortgages will permit you to make additional payments to your principal at any time. You can benefit from this provision to pay down your principal when you get some extra money.

Here's an example: five years after moving into your home, you receive a huge tax refund,a very large inheritance, or a cash gift; , you could apply a portion of this windfall toward your mortgage loan principal, resulting in huge savings and a shortened loan period. Unless the mortgage loan is very large, even a few thousand dollars applied early can produce huge savings over the life of the loan.

First Community Bank of Central Al. can walk you through the pitfalls of getting a mortgage. Give us a call at (334) 285-8850.

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