Extra Payments Provide Big Mortgage Savings

There's a trick to reduce the repayment period of your mortgage and save thousands over the course of your loan: Make extra payments which apply toward the loan principal. People make this happen in several ways. Paying one extra payment once per year is likely 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 pay that additional amount monthly. Finally, you can pay half of your mortgage payment every two weeks. Each of these options yields different results, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.

Additional One-time payment

Some borrowers just can't make extra payments. Keep in mind that virtually all mortgages will allow you to make additional payments to your principal at any time. You can benefit from this rule to pay extra on your principal any time you come into extra money.

If, for example, you receive a surprise windfall just a few years into your mortgage, you could pay this windfall toward your mortgage loan principal, which would result in enormous savings and a shortened payback period. For most loans, even a small amount, paid early in the loan period, could offer huge savings in interest and in the duration of the loan.

Alerus Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call: 952 417 8481.

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