Additional Payments Yield Big Savings

Making regular additional payments on the loan principal will yield big savings. You can pay extra on principal in various ways. Paying 1 extra payment once a year is probably the simplest to track. However, many people will not be able to pull off such an enormous additional payment, so splitting one additional payment into twelve additional monthly payments works too. Another popular option is to pay half of your payment every two weeks. The result is you make one extra monthly payment in a year. These options differ slightly in lowering the final payback amount and reducing payback length, but they will all significantly shorten the duration of your mortgage and lower the total interest you will pay over the life of the loan.

Lump-sum Additional Payment

It may not be possible for you to pay down your principal every month or even every year. But remember that most mortgages will allow you to make additional payments at any time. You can benefit from this provision to pay extra on your principal any time you get some extra money. For example: five years after buying your home, you get a larger than expected tax refund,a very large inheritance, or a cash gift; , paying several thousand dollars into your mortgage principal will shorten the period of your loan and save enormously on mortgage interest over the duration of the loan. For most loans, even this relatively small amount, paid early enough in the loan period, could offer huge savings in interest and length of the loan.

The Lending Source can walk you The Lending Source can answer questions about these interest savings and many others. Give us a call at (973) 601-2122.

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