Making consistent additional payments on your loan principal can yield huge savings. People pay extra in a few ways. Paying one additional payment once every year is perhaps the simplest to track. If you can't pay an additional whole payment in one month, you can divide your payment by 12 and write a check for that additional amount monthly. Finally, you can pay half of your mortgage payment every other week. Each of these options produces slightly different results, but each will significantly shorten the duration of your mortgage and lower the total interest paid over the life of the loan.
It may not be possible for you to pay more every month or even every year. Remember that virtually all mortgage contracts will permit you to pay extra on your principal at any time. You can benefit from this provision to pay extra on your principal any time you get some extra money.
Here's an example: a few years after moving into your home, you receive a larger than expected tax refund,a very large legacy, or a non-taxable cash gift; , investing a few thousand dollars into your home's principal will shorten the repayment period of your loan and save enormously on interest over the duration of the mortgage loan. For most loans, even a modest amount, paid early enough in the mortgage, could offer huge savings in interest and length of the loan.
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