Huge Savings on Interest: Available to Anyone

There's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars in interest: Make additional payments which go toward your principal. Borrowers can pay more on principal in many different ways. For many people,Perhaps the simplest way to organize this process is by making 1 extra payment a year. But some people won't be able to afford such a large additional expense, so dividing an extra payment into 12 extra monthly payments works as well. Another option is to pay half of your payment every two weeks. The effect here is that you will make one extra monthly payment each year. Each option yields slightly different results, but each will significantly shorten the duration of your mortgage and lower the total interest you will pay over the life of the loan.

Lump Sum Extra Payment

Some borrowers can't manage extra payments. But remember that most mortgage contracts will allow additional payments at any time. Any time you come into unexpected cash, consider using this provision to make a one-time additional payment on principal.

Here's an example: several years after moving into your home, you get a huge tax refund,a large inheritance, or a non-taxable cash gift; , you could pay this windfall toward your loan principal, resulting in enormous savings and a shortened payback period. Unless the mortgage loan is quite large, even a few thousand dollars applied early in the loan period can produce huge savings over the life of the loan.

Hawk Mortgage Group can walk you through the pitfalls of getting a mortgage. Give us a call: (443) 619-7900.

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