Extra Payments Yield Big Savings

Making consistent additional payments toward the principal will yield big returns. Borrowers pay more on principal in various ways. Making 1 extra payment once per year is probably the easiest to arrange. Of course, many people won't be able to swing such an enormous extra expense, so splitting a single extra payment into 12 extra monthly payments works as well. Finally, you can pay a half payment every two weeks. These options differ slightly in lowering the final payback amount and reducing 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.

Lump-sum Additional 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 mortgage contracts allow you to make additional principal payments at any time. Whenever you get some extra money, consider using this provision to make a one-time additional payment on your mortgage principal. Here's an example: several years after buying your home, you get a larger than expected tax refund,a large inheritance, or a non-taxable cash gift; , you could pay this money toward your mortgage loan principal, which would result in significant savings and a shorter loan period. For most loans, even a relatively small amount, paid early enough in the mortgage, could offer huge savings in interest and duration of the loan.

South County Mortgage can walk you through the pitfalls of getting a mortgage. Call us at (401) 583-4150.

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