There's a simple trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make extra payments which go to your principal. People accomplish this goal in a few ways. For many people,Perhaps the simplest way to keep track is to make one additional payment a year. But many people will not be able to afford such a large extra expense, so dividing an additional payment into twelve extra monthly payments is a great option too. Another option is to pay a half payment every two weeks. The effect here is that you will make one extra monthly payment in a year. These options differ slightly in reducing the total interest paid and shortening payback length, but they will all significantly shorten the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay down your principal every month or even every year. But it's important to note that most mortgage contracts will allow you to make additional payments at any time. Any time you get some extra money, you can use this rule to make an additional one-time payment on your mortgage principal.
If, for example, you were to receive a very large gift or tax refund four years into your mortgage, paying a few thousand dollars into your home's principal can significantly shorten the repayment duration of your loan and save enormously on interest paid over the duration of the mortgage loan. Unless the loan is quite large, even modest amounts applied early can produce huge benefits over the life of the loan.
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