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Making regular extra payments toward your principal balance can yield big returns. You can do this in several ways. Making one extra full payment one time a year is perhaps the simplest to arrange. If you can't pay an extra whole payment in one month, you can divide your payment by 12 and write a check for that additional amount monthly. Finally, you can commit to paying a half payment every two weeks. These options differ slightly in reducing the total interest paid and shortening payback length, but each will significantly shorten the duration of your mortgage and lower the total interest you will pay over the duration of the loan.
Additional One-time payment
Some folks can't manage extra payments. But you should remember that most mortgage contracts allow additional principal payments at any time. You can take advantage of this rule to pay down your principal any time you get some extra money.
If, for example, you receive a large gift or tax refund five years into your mortgage, you could apply a portion of this money toward your loan principal, resulting in enormous savings and a shortened loan period. For most loans, even this small amount, paid early in the mortgage, could offer big savings in interest and in the length of the loan.
Seattle Mortgage Brokers LLC can answer questions about these interest savings and many others. Give us a call at 206-409-5626 (LOAN) (LOAN).