Additional Payments Yield Big Savings

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Making consistent additional payments on the principal balance will yield huge returns. You can accomplish this using a few different techniques. For many people,Perhaps the simplest way to organize this process is to make 1 additional mortgage payment every year. However, some people will not be able to afford such a large additional payment, so splitting an extra payment into twelve extra monthly payments is a fine option too. Another very popular option is to pay half of your payment every other week. The result is you will make one extra monthly payment in a year. These options differ a little in reducing the final payback amount and shortening payback length, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.

Lump-sum Additional Payment

Some people just can't make extra payments. But it's important to note that most mortgage contracts allow additional principal payments at any time. You can benefit from this provision to pay extra on your mortgage principal any time you get some extra money. If, for example, you were to receive an unexpected windfall five years into your mortgage, you could pay a portion of this money toward your mortgage loan principal, which would result in significant savings and a shortened payback period. Unless the mortgage loan is quite large, even modest amounts applied early can produce huge savings over the duration of the loan.

First American Financial can answer questions about these interest savings and many others. Call us: 770-270-9044.

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