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Additional Payments Provide Huge Mortgage Savings

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Here's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars over the course of your loan: Make extra payments which apply toward the principal. Borrowers pay against principal in many different ways. For many people,Perhaps the simplest way to keep track is to make one additional payment every year. However, many folks can't swing such an enormous extra expense, so splitting one additional payment into twelve additional monthly payments works too. Finally, you can commit to paying a half payment every other week. Each of these options produces slightly different results, but each will significantly shorten the duration of your mortgage and lower your total interest paid.

Lump-sum Additional Payment

It may not be possible for you to pay extra every month or even every year. Keep in mind that almost all mortgage contracts will permit you to make additional payments to your principal at any time. You can take advantage of this rule to pay down your mortgage principal any time you come into extra money.

For example: a few years after moving into your home, you receive a huge tax refund,a very large legacy, or a cash gift; , paying several thousand dollars into your mortgage principal can shorten the period of your loan and save enormously on mortgage interest over the life of the loan. For most loans, even a small amount, paid early enough in the mortgage, could offer big savings in interest and duration of the loan.

Residential Mortgage Services has your mortgage answers. Give us a call: 702-796-3453 x3055.