Extra Payments Yield Big Mortgage Savings

Paying consistent extra payments toward the principal balance provides singificant returns. Borrowers use different methods to meet this goal. Making 1 extra full payment once a year is likely the simplest to arrange. If you can't pay an additional whole payment all at once, you can divide your payment by 12 and pay that additional amount monthly. Finally, you can pay half of your mortgage payment every two weeks. Each option yields different results, but each will significantly shorten the duration of your mortgage and lower the total interest paid over the life of the loan.

One-time Additional Payment

It may not be possible for you to pay more every month or even every year. Keep in mind that most mortgages will permit you to pay extra on your principal at any time. Any time you get some unexpected money, you can use this rule to make an additional one-time payment toward your mortgage principal.

For example: a few years after moving into your home, you get a larger than expected tax refund,a very large inheritance, or a non-taxable cash gift; , you could apply a portion of this windfall toward your mortgage loan principal, which would result in enormous savings and a shorter loan period. Unless the loan is very large, even a few thousand dollars applied early in the loan period can produce huge savings over the duration of the loan.

Atlantic Financial Services can walk you through the pitfalls of getting a mortgage. Call us: (732) 969-9300.

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