Making even the smallest extra payments on a mortgage can reduce the life of a loan, potentially by a significant amount. But how often should extra payments be made? There are two main options for consideration.
- Saving on interest: Extra payments = less in overall interest you pay on the whole life of the loan.
- Eliminating PMI: If you are unable to put down a 20% down payment, you are required to pay Private Mortgage Insurance (PMI) as part of your monthly payment. Making extra payments will help you achieve an 80% loan-to-value ratio sooner, which means you can eliminate PMI and lower your payment!
- Shortening the loan term: Making more frequent payments than required will speed up the clock and help you pay off your home in less than 30 years!
The best way to make additional payments on your mortgage is the way that makes the most sense to you and your financial goals.
At Spire Financial, we will help tailor your loan options to be meet your financial goals and our loan experts are here to guide you through the home purchase or refinance process. Contact us today to start the mortgage pre-approval process.