Making regular extra payments toward your loan principal yields enormous savings. Borrowers accomplish this goal in a few different ways. For many people,Perhaps the simplest way to keep track is to make one additional payment per year. If you can't afford to pay an extra whole payment all at once, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Finally, you can pay a half payment every two weeks. Each of these options yields slightly different results, but they will all significantly reduce the duration of your mortgage and lower the total interest paid over the life of the loan.
Some people just can't make extra payments. But remember that most mortgages allow additional principal payments at any time. You can benefit from this provision to pay extra on your mortgage principal when you come into extra money.
If, for example, you receive an unexpected windfall five years into your mortgage, investing several thousand dollars into your home's principal can significantly shorten the repayment period of your loan and save enormously on interest paid over the duration of the mortgage loan. Unless the mortgage loan is very large, even modest amounts applied early can yield huge savings over the duration of the loan.
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