Traditionally, as home buyers, after we found the new home of our dreams, we spend hours and even days searching for the best home loan with low interest rates and low closing costs. We fight for the lowest possible monthly payment and most of the time don’t think twice about our total cost of interest or if we can pay off our home loan a little sooner. For most of us, after we sign our closing documents, we forget about it, and go through life paying the minimum payments.
Little things add up when paying down your home loan. The most popular loan program most homeowners do take advantage of is bi-weekly mortgage payments. This approach is a great way to pay down your loan faster and save money on interest payments. It basically adds up to an extra payment a year and makes a huge long and short term difference on the interest you pay. Lenders usually charge a set up fee but this is offset with the eventual savings. If you didn’t have the option to take advantage of this approach, or opted out of it, you may want to contact you lender to see what you can do to set up a bi-weekly payment option. If you are unable to make bi-weekly payments you can always pay a little more on each payment or make a large lump sum payment each year. By paying your principle down faster, you will save thousands of dollars during the life of your loan. Recently, several programs have developed that can help you pay your mortgage off in as little as 15 years.
Like everything else in life, it’s the small things that matter, and your efforts to pay your principal down now can put you in a great place in the near future. Before agreeing on a loan, ask your lender what you can do to pay your loan off faster and save money on interest. Many lenders have great programs and useful information. Taking the time to learn a little more about paying your principle down faster can significantly reduce the interest costs of your real estate investment.
Are there any loan programs you recommend?
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This is good advice and the first time I have seen a number put on the benefit. One extra payment a year; I wonder how that shortens a loan over its’s lifetime.