Here's a simple trick to significantly reduce the length of your mortgage and save thousands over the course of your loan: Make extra payments that apply to the principal. People pay extra in a few ways. Paying one additional full payment one time every year is likely the easiest to track. If you can't pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another very popular option is to pay half of your payment every other week. The result is you make one extra monthly payment each year. These options differ a little in lowering the final payback amount and reducing payback length, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.
Some borrowers just can't make extra payments. Remember that almost all mortgage contracts will permit you to make additional payments to your principal at any time. You can benefit from this provision to pay down your mortgage principal any time you come into extra money. For example: five years after moving into your home, you receive a very large tax refund,a very large legacy, or a non-taxable cash gift; , investing a few thousand dollars into your mortgage principal can significantly shorten the period of your loan and save enormously on mortgage interest over the life of the mortgage loan. Unless the loan is very large, even a few thousand dollars applied early in the loan period can produce huge benefits over the duration of the loan.
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