Mortgage Saving Tips

There's a trick to reduce the repayment period of your mortgage and save thousands in interest: Make extra payments that apply toward your loan principal. You can accomplish this using a few different techniques. For many people,Perhaps the simplest way to organize this process is to make one extra payment every year. But some folks can't afford such a large extra payment, so splitting an additional payment into twelve additional monthly payments is a fine option too. Another popular option is to pay half of your payment every two weeks. The effect here is that you 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 the total interest paid over the life of the loan.

Lump Sum Extra Payment

It may not be possible for you to pay down your principal every month or even every year. But you should remember that most mortgages will allow additional principal payments at any time. Whenever you get some unexpected money, you can use this provision to pay an additional one-time payment toward your principal. If, for example, you receive a large gift or tax refund five years into your mortgage, you could apply this windfall toward your mortgage loan principal, resulting in significant savings and a shorter loan period. For most loans, even a relatively small amount, paid early in the loan period, could offer huge savings in interest and length of the loan.

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