Extra Payments Yield Big Savings

There's a trick to reduce the repayment period of your mortgage and save you thousands in interest: Make additional payments which apply to your loan principal. You can accomplish this in various ways. For many people,Perhaps the easiest way to organize this process is to make one extra payment per year. If you can't afford to pay an extra whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another very popular option is to pay half of your payment every two weeks. The effect here is that you make one additional monthly payment each year. These options differ a little in reducing the total interest paid and reducing payback length, but they will all significantly shorten the length of your mortgage and lower the total interest you will pay over the duration of the loan.

Lump-sum Additional Payment

Some borrowers can't manage extra payments. But remember that most mortgages allow additional principal payments at any time. You can benefit from this provision to pay extra on your mortgage principal any time you come into extra money. If, for example, you were to receive a very large gift or tax refund four years into your mortgage, paying a few thousand dollars into your mortgage principal will significantly shorten the duration of your loan and save enormously on interest paid over the duration of the loan. Unless the loan is very large, even modest amounts applied early can produce 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: (334) 285-8850.

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