Paying regular additional payments on your principal will yield huge returns. Borrowers can do this in several ways. Paying one additional full payment once per year may be the easiest to track. However, some folks won't be able to afford such a large extra payment, so dividing a single extra payment into 12 extra monthly payments works too. Another popular option is to pay half of your payment every other week. The effect here is that you will make one extra monthly payment each year. Each of these options yields different results, but they will all significantly shorten the duration of your mortgage and lower the total interest paid over the duration of the loan.
It may not be possible for you to pay down your principal every month or even every year. But you should remember that most mortgages will allow you to make additional principal payments at any time. Whenever you come into unexpected cash, you can use this rule to pay an additional one-time payment toward your principal. If, for example, you receive an unexpected windfall four years into your mortgage, paying several thousand dollars into your mortgage principal can significantly shorten the duration of your loan and save enormously on interest paid over the duration of the loan. For most loans, even this relatively small amount, paid early in the mortgage, could offer huge savings in interest and duration of the loan.
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