Mortgage Savings

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There's a trick to reduce the repayment period of your mortgage and save thousands of dollars in interest: Make additional payments that go to the principal. Borrowers pay extra on principal by employing various techniques. Making a single extra payment one time a year may be the simplest to track. Of course, many folks won't be able to pull off such an enormous additional payment, so dividing a single extra payment into 12 extra monthly payments works as well. Finally, you can commit to paying a half payment every two weeks. These options differ a little in reducing the total interest paid and shortening payback length, but each will significantly reduce the duration of your mortgage and lower your total interest paid.

Lump Sum Extra Payment

Some folks can't manage extra payments. But it's important to note that most mortgages will allow you to make additional principal payments at any time. Any time you come into unexpected cash, you can use this provision to make a one-time additional payment on principal.

Here's an example: five years after buying your home, you get a larger than expected tax refund,a large legacy, or a cash gift; , investing a few thousand dollars into your home's principal can reduce the duration of your loan and save enormously on interest paid over the duration of the mortgage loan. Unless the mortgage loan is very large, even small amounts applied early can yield huge benefits over the duration of the loan.

American Equity Mortgage can walk you the mortgage process. Call us at 6178725064.