Save Big on your Mortgage

Here's a simple trick to significantly reduce the length of your mortgage and save thousands over the course of your loan: Make additional payments that apply toward the principal. People employ various techniques to meet this goal. Making a single extra payment once every year is likely the simplest to arrange. If you can't afford to pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Finally, you can pay half of your mortgage payment every other week. Each of these options yields different results, but they will all significantly shorten the length of your mortgage and lower the total interest you will pay over the life of the loan.

Lump Sum Extra Payment

It may not be possible for you to pay extra every month or even every year. Keep in mind that almost all mortgage contracts will allow you to pay extra on your principal at any point during repayment. You can benefit from this provision to pay down your principal when you get some extra money. If, for example, you were to receive a large gift or tax refund just a few years into your mortgage, paying several thousand dollars into your mortgage principal can shorten the duration of your loan and save a huge amount on mortgage interest paid over the life of the mortgage loan. For most loans, even a modest amount, paid early enough in the mortgage, could offer huge savings in interest and in the length of the loan.

The Reen Team at American Pacific Mortgage can walk you through the pitfalls of getting a mortgage. Call us at (408) 626-1879.

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