Here's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars over the course of your loan: Make additional payments which apply to your loan principal. Borrowers can pay extra on principal in various ways. For many people,Perhaps the easiest way to keep track is by making one additional mortgage payment a year. Of course, many folks can't pull off this huge additional expense, so dividing one additional payment into twelve additional monthly payments works as well. Finally, you can commit to paying a half payment every other week. These options differ a little in lowering the total interest paid and shortening payback length, but they will all significantly reduce the length of your mortgage and lower the total interest paid over the duration of the loan.
It may not be possible for you to pay more every month or even every year. But remember that most mortgage contracts will allow additional principal payments at any time. You can benefit from this provision to pay extra on your mortgage principal any time you get some extra money.
If, for example, you were to receive a large gift or tax refund four years into your mortgage, paying several thousand dollars into your home's principal can significantly reduce the period of your loan and save a huge amount on mortgage interest paid over the duration of the loan. Unless the mortgage loan is quite large, even a few thousand dollars applied early can yield huge benefits over the duration of the loan.
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