Simple Ways to Save on Your Mortgage

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Paying regular extra payments on your loan principal can yield big returns. Borrowers accomplish this goal in several ways. For many people,Perhaps the simplest way to organize this process is to make one extra payment every year. However, some people will not be able to swing this huge extra payment, so splitting a single additional payment into 12 additional monthly payments is a great option too. Another popular option is to pay half of your payment every other week. The effect here is that you make one extra monthly payment each year. These options differ slightly in lowering 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 more every month or even every year. But remember that most mortgage contracts allow additional principal payments at any time. Whenever you get some unexpected money, consider using this provision to pay an additional one-time payment toward your mortgage principal. For example: a few years after buying your home, you get a larger than expected tax refund,a very large inheritance, or a non-taxable cash gift; , paying a few thousand dollars into your mortgage principal can shorten the period of your loan and save a huge amount on interest over the duration of the loan. Unless the loan is very large, even a few thousand dollars applied early in the loan period can produce huge savings over the life of the loan.

Alerus Mortgage has your mortgage answers. Call us: (612) 386-5901.

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