There’s a simple trick to paying off your mortgage quicker. Anyone can do it. It costs very little in the short term, will save you thousands in the long term and could shave years off your mortgage.
All you have to do is make one extra house payment a year, and even that may be easier than you think.
Making even just one extra payment a year can dramatically impact your finances when that extra payment is applied to the principal of your loan. When you pay down the principal, or the amount you originally borrowed, it saves you money in the long term because you’re no longer paying interest on that amount.
Even a good interest rate can add significantly to the cost of your home, so the more you can do to pay down principal, the more money you’ll save in the long run.
To make an extra payment a year with the least pinch to your wallet, simply divide your mortgage payment by 12 and add that amount to the total you pay each month.
For example, if your monthly payment is $1050, divide it by 12. You get $87.50. Add that amount to the $1050 for a total of $1137.50. Pay that amount (or more if you’re able) each month.
You can further speed up your pay off date (and overall savings) by applying bonuses, tax returns, and other sources of income to your principal as well.
First Financial offers a number of great mortgage options, including refinancing – click here to learn about our 10, 15, and 30 year mortgage features and see what a good fit for your home is!*
*A First Financial membership is required to obtain a mortgage and is open to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties. Subject to credit approval. Credit worthiness determines your APR.
Article Source: Jennifer Reynolds for CUInsight.com