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Paying regular extra payments toward your principal balance will provide big returns. Borrowers pay extra on principal in various ways. For many people,Perhaps the easiest way to keep track is by making 1 extra payment every year. However, many folks can't swing such an enormous extra payment, so dividing one extra payment into 12 additional monthly payments is a great option too. Finally, you can pay half of your mortgage payment every two weeks. These options differ slightly in lowering the final payback amount and reducing payback length, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Lump Sum Extra Payment
Some folks can't manage extra payments. Keep in mind that most mortgages will permit you to make additional payments to your principal at any time. Any time you come into unexpected money, consider using this provision to pay a one-time additional payment toward your principal. If, for example, you were to receive a surprise windfall five years into your mortgage, you could pay a portion of this windfall toward your mortgage loan principal, which would result in huge savings and a shorter payback period. Unless the loan is very large, even a few thousand dollars applied early in the loan period can yield huge savings over the life of the loan.
Mortgage Max Corporation d/b/a Chicagoland Home Mortgage Services can answer questions about these interest savings and many others. Give us a call at 773-557-1000.