By Manuel Tovar, October 13 – Hispanic Solutions Group
You should know that when you prepay your mortgage, you make additional payments on the principal balance of your loan. Paying additional principal on your mortgage can save you thousands of dollars in interest and help you build principal faster.
There are several ways to prepay a mortgage, which are listed below:
- Make an additional mortgage payment each year.
- Add extra dollars to each payment.
- Apply a lump sum after an inheritance or other windfall.
- Refund your mortgage.
- Some combination of the above
How much can I save by preparing my mortgage?
The benefit of paying additional principal on a mortgage is not just lowering your monthly interest expense a little bit at a time. It comes from paying off your outstanding loan balance with additional mortgage principal payments, dramatically reducing the total interest you will owe over the life of the loan.
Here’s an example of how prepay saves time and money:
Person X obtains a $ 120,000 mortgage at an interest rate of 4.5 percent. The monthly principal and interest on the mortgage total $ 608.02.
DIY Surcharge to Prepay the Mortgage
Assuming you want to budget an additional amount each month to prepay your principal. One tactic is to make one additional mortgage principal and interest payment per year. You can simply make a double payment during the month of your choice or add a twelfth of a principal and interest payment to each month’s payment. A year later, you will have made 13 payments.
Be sure to set aside any additional principal payments to go specifically towards your mortgage principal. Lenders generally have this option online or have a process to assign checks for principal payments only. Ask your lender for instructions. If you don’t specify that the extra payments should go towards the mortgage principal, the extra money will go towards your next monthly mortgage payment, which will not help you achieve your goal of prepaying your mortgage. If you have any questions related to finances, credits and other related topics, but do not know who to turn to, contact us by going to Hispanic Solutions Group, writing to firstname.lastname@example.org, by calling 612-216-1599 or accessing financial information on YouTube, The credit channel, Our specialists in charge of Mrs. Jessica Aliaga will be informing you of any concerns about this and other financial matters of general interest and guidance as in this topic, today we bring you the following report so that you can make your most important economic decisions , also him We invite you to follow our social networks: LinkendIn, Facebook, Twitter and Instagram