Congratulations on purchasing your home. You are now privileged to enjoy the thrills of home repair, maintenance, and occasional renovation. Depending on your mortgage structure, you may be paying off your home for up to thirty years. Luckily Timberwood Bank has some tips and tricks to help you reduce your repayment time. Using these three strategies, we’ll show you how to pay off more of your principal to decrease the term of your loan, and lessen your overall interest costs.
Method 1: Making Additional Payments
In addition to your regularly scheduled payments, making extra installments can help you knock down your principal and associated interest. These additional amounts can be paid on the same day as your scheduled portion, or they can be more frequent throughout the month as funds become available. If you find yourself having a surplus in your budget, a great option would be to use those dollars as an additional mortgage payment.
Method 2: Increasing Your Monthly Payments
As you make your mortgage payments each month, create a plan for how much you can add on top of your regular installments. Similar to method two, these subsequent funds will continue to help you pay down your principal amount, and lessen the amount of interest owed for the life of the loan.
Method 3: Making One Lump Payment
Sometimes if you’re refinancing or purchasing a home, you may be trading an old mortgage for a new one. In this case, we recommend making one large installment after closing. This not only pays off a large portion of your loan but brings your overall interest accumulation down as well.
Owning a home is an exciting and well-earned milestone, however, the additional costs of ownership can raise questions. If you’re curious about the most efficient way to pay down your mortgage, stop in and speak with one of our experienced lenders today.