There's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars in interest: Make extra payments that go to your loan principal. People pay extra in several ways. Making one extra full payment one time every year is perhaps the easiest to keep track of. Of course, some people won't be able to afford such a large extra payment, so dividing an extra payment into twelve extra monthly payments is a fine option too. Finally, you can commit to paying a half payment every two weeks. These options differ slightly in reducing the final payback amount and reducing payback length, but each will significantly reduce the length of your mortgage and lower the total interest you will pay over the life of the loan.
Some folks can't manage any extra payments. But it's important to note that most mortgages allow additional payments at any time. You can benefit from this rule to pay extra on your mortgage principal any time you come into extra money.
If, for example, you were to receive a surprise windfall three years into your mortgage, you could apply a portion of this windfall toward your loan principal, which would result in huge savings and a shorter loan period. For most loans, even this small amount, paid early enough in the loan period, could offer huge savings in interest and in the length of the loan.
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