There's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars over the course of your loan: Make additional payments which apply to the loan principal. People use different methods to accomplish this goal. For many people,Perhaps the easiest way to keep track is by making one additional payment a year. If you can't pay an extra whole payment in one month, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Another option is to pay half of your payment every two weeks. The result is you will make one additional monthly payment every year. These options differ slightly in reducing the final payback amount and reducing payback length, but they will all significantly shorten the duration of your mortgage and lower the total interest you will pay over the duration of the loan.
Some people just can't make extra payments. But it's important to note that most mortgages allow additional principal payments at any time. Any time you get some unexpected cash, you can use this rule to make an additional one-time payment on principal.
Here's an example: several years after buying your home, you get a larger than expected tax refund,a large legacy, or a cash gift; , paying a few thousand dollars into your home's principal can shorten the period of your loan and save enormously on interest paid over the life of the loan. Unless the loan is quite 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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