Big Savings on Interest: Available to Anyone
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Making consistent additional payments on the loan principal provides huge savings. Borrowers can pay more on principal in various ways. Paying one extra full payment once every year is probably the easiest to track. If you can't pay an extra whole payment all at once, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Finally, you can pay half of your mortgage payment every other week. Each option produces slightly different results, but each will significantly reduce the duration of your mortgage and lower the total interest paid over the life of the loan.
Lump Sum Extra Payment
Some borrowers just can't make any extra payments. But remember that most mortgages will allow additional payments at any time. Any time you come into extra money, you can use this provision to make an additional one-time payment toward principal.
If, for example, you receive an unexpected windfall five years into your mortgage, you could pay this money toward your loan principal, resulting in huge savings and a shortened loan period. For most loans, even this relatively small amount, paid early enough in the loan period, could offer huge savings in interest and duration of the loan.
Laser Lending can answer questions about these interest savings and many others. Give us a call: 801.999.0493.