Making regular additional payments toward your loan principal yields singificant returns. You can accomplish this using a few different techniques. Paying a single additional full payment once per year is perhaps the easiest to track. If you can't pay an extra whole payment in one month, you can divide your payment by 12 and pay that additional amount monthly. Another very popular option is to pay half of your payment every other week. The effect here is that you make one extra monthly payment in a year. These options differ slightly in reducing the final payback amount and reducing payback length, but each will significantly reduce the duration of your mortgage and lower the total interest paid over the life of the loan.
Some folks can't manage extra payments. But remember that most mortgages will allow you to make additional payments at any time. You can benefit from this provision to pay down your principal any time you come into extra money.
For example: several years after buying your home, you receive a very large tax refund,a large inheritance, or a non-taxable cash gift; , paying several thousand dollars into your mortgage principal will reduce the repayment duration of your loan and save a huge amount on interest paid over the life of the mortgage loan. Unless the loan is quite large, even a few thousand dollars applied early can yield huge savings over the life of the loan.
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