Huge Savings on Interest: Available to Anyone with a Mortgage
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Making regular extra payments toward the loan principal yields huge savings. People make this happen in several ways. Paying one additional full payment one time every year is likely the simplest to track. If you can't afford to pay an extra whole payment all at once, you can divide that payment by 12 and pay that additional amount monthly. Finally, you can pay a half payment every two weeks. Each option produces slightly different results, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.
Lump Sum Extra Payment
It may not be possible for you to pay down your principal every month or even every year. But remember that most mortgages allow you to make additional principal payments at any time. You can take advantage of this rule to pay down your principal when you come into extra money.
Here's an example: a few years after moving into your home, you receive a larger than expected tax refund,a very large inheritance, or a cash gift; , you could apply this money toward your loan principal, which would result in significant savings and a shorter loan period. For most loans, even this relatively modest amount, paid early enough in the mortgage, could offer huge savings in interest and in the length of the loan.
At American Bank of Oklahoma, we answer questions about money-saving strategies every day. Give us a call at 9183711065.