Making consistent additional payments toward the principal balance provides huge returns. Borrowers can do this in various ways. For many people,Perhaps the easiest way to organize this process is to make one additional mortgage payment a year. If you can't afford to pay an extra whole payment in one month, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another option is to pay a half payment every two weeks. The result is you will make one extra monthly payment every year. Each of these options yields slightly different results, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Some borrowers just can't make any extra payments. Keep in mind that almost all mortgage contracts will allow you to make additional payments to your principal at any time. Any time you get some extra money, consider using this rule to pay a one-time additional payment toward mortgage principal.
If, for example, you were to receive a very large gift or tax refund five years into your mortgage, you could pay a portion of this windfall toward your mortgage loan principal, which would result in huge savings and a shortened payback period. Unless the loan is quite large, even small amounts applied early in the loan period can produce huge benefits over the duration of the loan.
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