Additional Payments Yield Huge Savings

There's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars in interest: Make additional payments which are applied toward the principal. People accomplish this goal in several ways. For many people,Perhaps the simplest way to keep track is to make one extra payment per year. If you can't pay an additional whole payment in one month, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Finally, you can pay a half payment every two weeks. Each of these options produces slightly different results, but they will all significantly reduce the length of your mortgage and lower the total interest you will pay over the duration of the loan.

Lump Sum Extra Payment

It may not be possible for you to pay more every month or even every year. But remember that most mortgage contracts allow you to make additional principal payments at any time. Any time you come into unexpected cash, consider using this provision to make an additional one-time payment on mortgage principal. If, for example, you receive a surprise windfall four years into your mortgage, you could pay this windfall toward your loan principal, resulting in significant savings and a shortened payback period. Unless the loan is quite large, even modest amounts applied early can yield huge savings over the life of the loan.

SkyWest Mortgage can walk you through the pitfalls of getting a mortgage. Call us at (916) 399-5500.

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