Making consistent additional payments toward the principal yields significant returns. You can accomplish this in various ways. Making 1 additional full payment one time a year is perhaps the simplest to arrange. However, many folks can't swing such a large additional payment, so splitting one extra payment into 12 extra monthly payments works as well. Another option is to pay a half payment every other week. The effect here is that you make one additional monthly payment each year. These options differ slightly in reducing the total interest paid and reducing payback length, but they will all significantly shorten the length of your mortgage and lower the total interest you will pay over the life of the loan.
It may not be possible for you to pay more every month or even every year. But you should remember that most mortgage contracts allow you to make 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. Here's an example: five years after buying your home, you receive a larger than expected tax refund,a very large inheritance, or a non-taxable cash gift; , you could pay this windfall toward your loan principal, resulting in huge savings and a shortened loan period. Unless the loan is very large, even a few thousand dollars applied early in the loan period can yield huge benefits over the life of the loan.
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