Making regular extra payments toward your principal balance provides enormous savings. Borrowers pay extra in a few ways. Making one additional full payment one time a year may be the easiest to arrange. If you can't pay an extra whole payment all at once, you can divide that payment by 12 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 in a 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 folks just can't make any extra payments. But it's important to note that most mortgages will allow you to make additional principal payments at any time. You can benefit from this provision to pay down your principal when you come into extra money.
Here's an example: several years after moving into your home, you get a very large tax refund,a very large inheritance, or a cash gift; , investing a few thousand dollars into your mortgage principal will significantly shorten the period of your loan and save a huge amount on mortgage interest paid over the life of the loan. For most loans, even this relatively small amount, paid early enough in the mortgage, could offer big savings in interest and in the duration of the loan.
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