Making consistent additional payments toward the loan principal can yield singificant returns. Borrowers employ various techniques to accomplish this goal. For many people,Perhaps the easiest way to keep track is by making 1 extra payment per year. If you can't pay an additional whole payment in one month, you can divide that payment by 12 and write a check for that additional amount monthly. Finally, you can pay a half payment every two weeks. Each of these options produces slightly different results, but each will significantly reduce the duration of your mortgage and lower the total interest paid over the duration of the loan.
Some folks just can't make extra payments. But you should remember that most mortgages allow additional principal payments at any time. Any time you come into unexpected cash, consider using this provision to pay a one-time additional payment toward your principal. If, for example, you receive a very large gift or tax refund five years into your mortgage, you could apply this money toward your mortgage loan principal, which would result in significant savings and a shorter payback period. Unless the loan is quite 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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