Additional Payments Provide Big Savings

There's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars in interest: Make additional payments that are applied toward the loan principal. You pay more on principal by employing various techniques. Making one additional payment once a year is perhaps the simplest to keep track of. However, many people can't pull off such an enormous extra expense, so splitting an extra payment into 12 extra monthly payments works too. Finally, you can commit to paying a half payment every two weeks. Each option yields slightly different results, but they will all significantly reduce the duration 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 you should remember that most mortgages will allow you to make additional principal payments at any time. You can benefit from this rule to pay down your principal any time you come into extra money. If, for example, you receive a large gift or tax refund just a few years into your mortgage, paying a few thousand dollars into your home's principal can significantly shorten the period of your loan and save a huge amount on mortgage interest over the life of the loan. Unless the mortgage loan is very large, even small amounts applied early can yield huge savings over the life of the loan.

My FL Home Loans, Inc. can walk you through the pitfalls of getting a mortgage. Give us a call at (727) 743-1620.

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