Additional Payments Yield Huge Savings
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Making consistent additional payments on your principal balance will provide huge returns. You can do this using a few different techniques. For many people, the easiest way to keep track is by making one additional payment a year. 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. Another very popular option is to pay half of your payment every other week. The effect here is that you will make one extra monthly payment every year. Each option produces slightly different results, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Lump-sum Additional Payment
Some folks can't manage any extra payments. But you should remember that most mortgages will allow additional principal payments at any time. You can take advantage of this rule to pay extra on your principal any time you come into extra money.
For example: five years after moving into your home, you receive a larger than expected tax refund or a cash gift; investing a few thousand dollars into your mortgage principal can shorten the repayment period of your loan and save enormously on mortgage interest paid over the duration of the mortgage loan. For most loans, even a relatively small amount, paid early enough in the loan period, could offer big savings in interest and length of the loan.
Primebank can get you past the pitfalls of getting a mortgage. Call us in Le Mars at 712-546-4175, in Sioux Center at 712-722-4545, or in Sioux City at 712-224-5400.