Here'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 that go to your loan principal. People make this happen in several different ways. For many people,Perhaps the simplest way to keep track is to make one extra payment every year. If you can't pay an extra whole payment all at once, you can divide your payment by 12 and write a check for that additional amount monthly. Another option is to pay a half payment every two weeks. The result is you will make one additional monthly payment each year. These options differ a little in reducing the total interest paid and shortening payback length, but each will significantly reduce the length of your mortgage and lower the total interest paid over the life of the loan.
It may not be possible for you to pay extra every month or even every year. But you should remember that most mortgage contracts will allow you to make additional principal payments at any time. Whenever you come into extra cash, consider using this rule to pay a one-time additional payment on principal.
For example: several years after moving into your home, you get a huge tax refund,a very large legacy, or a cash gift; , you could apply a portion of this money toward your mortgage loan principal, resulting in enormous savings and a shortened loan period. Unless the mortgage loan is quite large, even small amounts applied early in the loan period can yield huge savings over the life of the loan.
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