Extra Payments Provide Big Savings

Paying consistent extra payments toward the loan principal yields enormous returns. People use different methods to meet this goal. For many people,Perhaps the simplest way to organize this process is by making 1 additional mortgage payment every year. Of course, many people will not be able to swing such an enormous additional expense, so dividing one additional payment into twelve extra monthly payments is a fine option too. Finally, you can commit to paying half of your mortgage payment every other week. These options differ slightly in lowering the total interest paid and shortening payback length, but each will significantly reduce the length of your mortgage and lower your total interest paid.

Lump Sum Extra Payment

It may not be possible for you to pay down your principal every month or even every year. But it's important to note that most mortgages will allow you to make additional principal payments at any time. Any time you get some extra money, you can use this rule to pay an additional one-time payment toward mortgage principal.

Here's an example: a few years after buying your home, you get a very large tax refund,a very large legacy, or a non-taxable cash gift; , you could apply this windfall toward your loan principal, which would result in enormous savings and a shorter payback period. For most loans, even a relatively modest amount, paid early in the loan period, could offer big savings in interest and duration of the loan.

Hawk Mortgage Group can walk you Hawk Mortgage Group has your mortgage answers. Call us: (443) 619-7900.

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