Making consistent extra payments toward your loan principal provides huge savings. You can do this in several ways. For many people,Perhaps the simplest way to keep track is to make one extra mortgage payment per year. But some people won't be able to afford such an enormous additional payment, so splitting an extra payment into 12 additional monthly payments is a great option too. Finally, you can pay half of your mortgage payment every two weeks. Each option produces different results, but each will significantly shorten the length of your mortgage and lower your total interest paid.
Some people can't manage extra payments. Keep in mind that almost all mortgage contracts will allow you to pay extra on your principal at any time. Whenever you get some unexpected money, consider using this provision to make a one-time additional payment on your mortgage principal.
If, for example, you receive a very large gift or tax refund four years into your mortgage, you could pay a portion of this money toward your loan principal, resulting in enormous savings and a shortened loan period. Unless the loan is quite large, even a few thousand dollars applied early can yield huge savings over the life of the loan.
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