Pay More on Mortgage and Save A Fortune!

What if you could pay more on to your mortgage and save money? It would definitely be interesting isn’t it? This seems like a fairy tale but it is absolutely a true fact.  You definitely can save more money by paying more money on the actual mortgage amount!

Following are the key benefits of paying more money, ultimately saving money:

  • The total term to pay the mortgage is considerably dropped down.
  • The actual amount to be paid is also significantly reduced.

How does this work? To make the things clearer, let us take the following example for instance:

Let the initial mortgage amount be $200,000 and the rate of interest be 6.5%. In the next 30 years term, the mortgager will have to make a monthly payment of $1264 only. The total interest to be paid for the mortgage will be a whopping $255,088.98.  Resultantly, by the end of the term, the mortgager will pay $455,088.98 in total.

On the other hand, if one opts for a flexible bi-weekly plan and adds just another additional monthly payment a year of the initial $1264 an extensive difference could be observed. The total interest to be paid for the mortgage would considerably come down to $199,098.92.  Thus, the total cost of the mortgage including the interest when paid in full will be $399,098.92. This happens to be the most attractive part of this modus operandi.  Interestingly, the pay off date of the loan would eventually come down to 24 years (instead of the initial 30 years)! Consequently, over 6 years are easily saved by this procedure.

Note: While adopting this method the mortgager needs to ensure that whenever the payment is made a separate check needs to be written. This different check would contain a special note which would state that this amount is to be added on to the principal amount and not on to the interest.

With little budget adjustments you can fulfill your dream of having your own home. You need not look too far ahead, pay a little more and save a considerable amount of money!

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