Additional Payments Yield Big Mortgage Savings

Paying regular extra payments toward your principal can yield big returns. Borrowers can pay against principal by employing various techniques. For many people,Perhaps the easiest way to keep track is to make one extra payment per year. But many people will not be able to afford this huge extra payment, so dividing one extra payment into twelve extra monthly payments works as well. Finally, you can pay a half payment every two weeks. These options differ a little in reducing the final payback amount and shortening payback length, but they will all significantly shorten the length of your mortgage and lower the total interest you will pay over the life of the loan.

One-time Additional Payment

It may not be possible for you to pay down your principal every month or even every year. But it's important to note that most mortgages allow additional principal payments at any time. Any time you get some unexpected money, consider using this provision to make an additional one-time payment on mortgage principal.

For example: several years after moving into your home, you get a larger than expected tax refund,a large legacy, or a non-taxable cash gift; , paying several thousand dollars into your home's principal can shorten the period of your loan and save a huge amount on interest over the life of the loan. Unless the loan is very large, even modest amounts applied early in the loan period can yield huge savings over the life of the loan.

Alerus Mortgage can walk you At Alerus Mortgage, we answer questions about money-saving strategies almost every day. Give us a call: 952 417 8481.

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