Big Interest Savings: Available to Anyone

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Paying consistent additional payments on the principal yields big returns. You can do this in various ways. Paying one additional payment one time every year is perhaps the easiest to arrange. However, some folks can't swing such an enormous extra expense, so dividing an additional payment into 12 extra monthly payments is a fine option too. Finally, you can pay a half payment every other week. These options differ a little in lowering the final payback amount and reducing payback length, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.

Lump-sum Additional Payment

Some borrowers just can't make extra payments. Remember that virtually all mortgage contracts will allow you to make additional payments to your principal at any point during repayment. Whenever you get some unexpected cash, you can use this rule to make a one-time additional payment toward your mortgage principal.

Here's an example: a few years after buying your home, you receive a very large tax refund,a very large inheritance, or a cash gift; , you could apply a portion of this money toward your loan principal, resulting in significant savings and a shorter payback period. For most loans, even this small amount, paid early enough in the mortgage, could offer huge savings in interest and length of the loan.

We answer questions about money-saving strategies every day. Call us at 214.485.2200.