Paying consistent additional payments on the loan principal provides enormous savings. Borrowers can accomplish this using a few different techniques. For many people,Perhaps the simplest way to keep track is to make one additional mortgage payment per year. Of course, many people won't be able to afford this huge extra payment, so splitting a single additional payment into 12 additional monthly payments is a great option too. Finally, you can commit to paying a half payment every other week. These options differ a little in reducing the final payback amount and shortening payback length, but each will significantly shorten the duration of your mortgage and lower the total interest you will pay over the life of the loan.
Some borrowers just can't make extra payments. But remember that most mortgages allow additional principal payments at any time. Any time you come into unexpected cash, you can use this rule to pay a one-time additional payment on your principal. If, for example, you were to receive a large gift or tax refund three years into your mortgage, investing a few thousand dollars into your home's principal will significantly shorten the period of your loan and save a huge amount on mortgage interest paid over the life of the mortgage loan. For most loans, even this modest amount, paid early in the loan period, could offer huge savings in interest and in the duration of the loan.
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