Here's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars over the course of your loan: Make additional payments which are applied to your principal. You can accomplish this in several ways. For many people,Perhaps the easiest way to keep track is by making one additional payment every year. But some people can't swing this huge additional expense, so splitting a single additional payment into 12 extra monthly payments works too. Finally, you can pay half of your mortgage payment every two weeks. Each option produces different results, but they will all significantly reduce the duration of your mortgage and lower your total interest paid.
Some people just can't make any extra payments. Remember that almost all mortgage contracts will allow you to pay extra on your principal at any time. Whenever you get some unexpected cash, you can use this provision to make a one-time additional payment toward mortgage principal.
If, for example, you were to receive a very large gift or tax refund three years into your mortgage, investing a few thousand dollars into your mortgage principal can significantly reduce the repayment period of your loan and save a huge amount on mortgage interest paid over the duration of the loan. For most loans, even a modest amount, paid early enough in the mortgage, could offer huge savings in interest and length of the loan.
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