Mortgage Saving Tips

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Making consistent extra payments on your principal balance can yield huge savings. Borrowers can accomplish this in several ways. Making a single additional payment once every year may be the simplest to keep track of. If you can't 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 a half payment every two weeks. The result is you will make one additional monthly payment in a year. These options differ slightly in lowering the total interest paid and shortening payback length, but each will significantly reduce the length of your mortgage and lower your total interest paid.

Lump Sum Extra 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 payments at any time. You can benefit from this rule to pay extra on your principal when you get some extra money. If, for example, you were to receive a surprise windfall three years into your mortgage, you could pay this money toward your loan principal, resulting in huge savings and a shorter loan period. For most loans, even this small amount, paid early enough in the mortgage, could offer big savings in interest and in the duration of the loan.

Gateway Mortgage Denver can walk you through the pitfalls of getting a mortgage. Call us: 720-440-9741.