Paying consistent additional payments toward your loan principal yields big savings. People use different methods to meet this goal. For many people,Perhaps the simplest way to keep track is to make one extra payment per year. If you can't afford to pay an additional whole payment in one month, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another option is to pay half of your payment every other week. The effect here is that you make one additional monthly payment every year. Each of these options yields slightly different results, but each will significantly shorten the length of your mortgage and lower the total interest you will pay over the duration of the loan.
Some folks just can't make any extra payments. Keep in mind that virtually all mortgage contracts will allow you to make additional payments to your principal at any time. Whenever you come into unexpected cash, consider using this provision to pay an additional one-time payment on principal.
If, for example, you were to receive an unexpected windfall four years into your mortgage, you could apply this windfall toward your loan principal, which would result in huge savings and a shorter loan period. For most loans, even a small amount, paid early in the mortgage, could offer huge savings in interest and duration of the loan.
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