Additional Payments Provide Big Savings
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There's a trick to reduce the repayment period of your mortgage and save thousands over the course of your loan: Make extra payments which are applied to your loan principal. You can accomplish this in various ways. For many people,Perhaps the easiest way to keep track is to make one extra mortgage payment a year. But many people can't swing this huge additional expense, so splitting one extra payment into twelve additional monthly payments is a fine option too. Finally, you can pay a half payment every two weeks. These options differ slightly in lowering the total interest paid and reducing payback length, but each will significantly reduce the duration of your mortgage and lower the total interest paid over the life of the loan.
Additional One-time payment
Some people just can't make any extra payments. Keep in mind that almost all mortgages will allow you to pay extra on your principal at any time. You can benefit from this rule to pay extra on your principal any time you come into extra money.
If, for example, you were to receive a large gift or tax refund three years into your mortgage, investing several thousand dollars into your mortgage principal can significantly reduce the repayment period of your loan and save a huge amount on mortgage interest paid over the life of the loan. Unless the loan is quite large, even small amounts applied early can yield huge benefits over the life of the loan.
At Pinnacle Lending Group, Inc., we answer questions about money-saving strategies every day. Call us at (702) 730-2085.