Here's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars over the course of your loan: Make additional payments that apply toward the loan principal. People employ various techniques to accomplish this goal. For many people,Perhaps the easiest way to keep track is by making 1 additional payment per year. If you can't 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. Another option is to pay a half payment every two weeks. The effect here is that you make one extra monthly payment in a year. These options differ a little in reducing the final payback amount and reducing payback length, but each will significantly reduce the length of your mortgage and lower the total interest you will pay over the life of the loan.
It may not be possible for you to pay down your principal every month or even every year. Keep in mind that most mortgage contracts will permit you to make additional payments to your principal at any time. Whenever you get some unexpected money, consider using this provision to pay a one-time additional payment toward your mortgage principal.
If, for example, you were to receive a surprise windfall four years into your mortgage, investing several thousand dollars into your mortgage principal will shorten the duration of your loan and save enormously on mortgage interest over the duration of the mortgage loan. For most loans, even a relatively small amount, paid early in the mortgage, could offer huge savings in interest and duration of the loan.
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