Big Savings on Interest: Available to Anyone

Making consistent extra payments on the loan principal can yield huge savings. Borrowers pay extra in several different ways. Paying 1 additional payment one time every year is likely the easiest to track. If you can't pay an extra whole payment in one month, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Another very popular option is to pay half of your payment every two weeks. The effect here is that you make one additional monthly payment every year. Each option yields slightly different results, but each will 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. Keep in mind that virtually all mortgages will permit you to pay extra on your principal at any time. You can benefit from this rule to pay down your mortgage principal when you get some extra money.

If, for example, you were to receive a surprise windfall just a few years into your mortgage, you could apply this money toward your mortgage loan principal, resulting in huge savings and a shortened payback period. For most loans, even this modest amount, paid early in the mortgage, could offer big savings in interest and length of the loan.

Southwest Funding #841 can walk you At Southwest Funding #841, we answer questions about money-saving strategies almost every day. Call us: (512) 291-6100.

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