Making regular additional payments toward the loan principal yields huge savings. Borrowers accomplish this goal in several ways. Making one additional payment one time per year is perhaps the easiest to arrange. If you can't pay an additional 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 effect here is that you make one additional monthly payment in a year. These options differ slightly in reducing the total interest paid and reducing payback length, but each will significantly reduce the length of your mortgage and lower your total interest paid.
Some folks just can't make any extra payments. Keep in mind that almost all mortgages will permit you to pay extra on your principal at any time. You can take advantage of this rule to pay down your principal any time you come into extra money. If, for example, you were to receive a large gift or tax refund four years into your mortgage, investing several thousand dollars into your mortgage principal can shorten the duration of your loan and save enormously on interest over the duration of the mortgage loan. For most loans, even this modest amount, paid early in the loan period, could offer big savings in interest and in the duration of the loan.
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