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In this new and maybe crazy era of negative amortization and interest only loans, it is very refreshing for us to discuss and illustrate the merits of actually adding to your monthly payments. Generally speaking, if you increase the amount of your scheduled monthly payment, the entire increased amount will be applied directly to principal reduction. This, in turn, creates two obvious benefits: The remaining term of your loan will be shortened, and the total amount of interest you will pay on your loan will be reduced. First, we’ll let you view an example of just what we are referring to. Then, we’ll have you work with your existing mortgage and actually determine some of those benefits that are available to you. In our example, our loan will have the following terms:
Now, we will assume payment increases from $1,896.20, to $2,000.00, $2,200.00, $2,500.00 and finally $3,000.00. Here’s what our example looks like. “OUR EXAMPLE”
As illustrated in “OUR EXAMPLE”, a payment increase of just $103.80 per month will shorten the term of the loan from 360 months to 310 months and save the borrower $62,632.00 in interest.
Now, let’s create “YOUR EXAMPLE”. You can begin by providing the following information about your current loan:
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11 Crow Canyon Court, Suite 100, San Ramon, CA 94583 |