There's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars in interest: Make extra payments which apply to your loan principal. Borrowers can do this using a few different techniques. For many people,Perhaps the simplest way to keep track is to make 1 additional mortgage payment every year. If you can't afford to pay an extra whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another very popular option is to pay half of your payment every other week. The result is you make one additional monthly payment each year. Each of these options produces slightly different results, 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 just can't make any extra payments. But it's important to note that most mortgage contracts allow you to make additional payments at any time. You can take advantage of this provision to pay down your mortgage principal any time you get some extra money. Here's an example: several years after buying your home, you receive a larger than expected tax refund,a large inheritance, or a non-taxable cash gift; , you could apply a portion of this windfall toward your mortgage loan principal, which would result in significant savings and a shorter payback period. Unless the mortgage loan is very large, even small amounts applied early in the loan period can yield huge savings over the duration of the loan.
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