Extra Payments Yield Huge Savings

Here's a simple trick to significantly reduce the length of your mortgage and save thousands over the course of your loan: Make extra payments that apply toward your loan principal. Borrowers use different methods to meet this goal. Making one extra full payment once a year is probably the easiest to keep track of. If you can't pay an additional whole payment all at once, you can divide that payment by 12 and write a check for that additional amount monthly. Finally, you can commit to paying a half payment every two weeks. These options differ slightly in lowering the total interest paid and reducing payback length, but each will significantly reduce the duration of your mortgage and lower the total interest you will pay over the duration of the loan.

One-time Additional Payment

Some people can't manage extra payments. Keep in mind that almost all mortgage contracts will allow you to make additional payments to your principal at any time. Whenever you get some unexpected money, consider using this provision to pay a one-time additional payment on your 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; , you could pay a portion of this windfall toward your mortgage loan principal, which would result in huge savings and a shortened loan period. Unless the loan is quite large, even small amounts applied early in the loan period can yield huge savings over the life of the loan.

Northeast Bancorp of America, Inc. can walk you the mortgage process. Give us a call: (440) 234-9660.

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