Extra Payments Provide Big Savings

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Here's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars in interest: Make extra payments which are applied to your principal. Borrowers pay extra in several different ways. Making 1 extra full payment one time every year is likely the simplest to keep track of. If you can't pay an additional whole payment in one month, you can divide that payment by 12 and write a check for that additional amount monthly. Finally, you can pay a half payment every two weeks. Each option produces slightly different results, but each will significantly shorten the duration of your mortgage and lower the total interest paid over the life of the loan.

Additional One-time payment

Some borrowers just can't make extra payments. But you should remember that most mortgages will allow you to make additional principal payments at any time. You can take advantage of this rule to pay extra on your mortgage principal when you get some extra money. If, for example, you receive a very large gift or tax refund five years into your mortgage, you could pay a portion of this windfall toward your mortgage loan principal, which would result in huge savings and a shorter payback period. Unless the loan is very large, even a few thousand dollars applied early in the loan period can produce huge savings over the duration of the loan.

Diamond Mortgage Company can walk you Diamond Mortgage Company can answer questions about these interest savings and many others. Call us: (215) 661-9570.