Obtaining a mortgage loan can be an overwhelming process. Sometimes, the thought of having a loan against your home for 30 years seems like an eternity. To help reduce that stress, there is an option to consider; make one additional principal and interest payment to your mortgage each year.
By doing so you can cut off anywhere from four to six years from a 30 year fixed mortgage loan.
This option may seem a bit difficult to do, however look into opening an additional savings account. Having a biweekly payment deposited or swept into that account can help that payment become more manageable. Align the biweekly sweep into the savings account with your biweekly pay schedule and use that savings account to make your monthly mortgage payment. With 52 weeks per year, switching to a biweekly payment system will add up to 26 payments per year, or 13 monthly payments. Now that additional month of principal and interest payment is already there!
The extra payment you’re making each year is helping you to build equity in your home at a quicker pace. This can save you thousands of dollars in payments and interest.
You have many options of what you can do with the money you save by building the equity in your home quicker like:
- Taking out a home improvement loan for the kitchen or bathroom you’ve always wanted
- Saving money by adding to your retirement or investment accounts
- Having funds available to purchase your next vehicle
- Putting additional funds aside for you children’s college fund
For more information on how you can start to save money and build equity, contact one of our Mortgage Loan Officers