Making consistent additional payments toward your loan principal will yield singificant returns. Borrowers can pay against principal in various ways. Paying one extra payment once every year may be the easiest to keep track of. If you can't afford to pay an extra whole payment in one month, you can divide that payment by 12 and write a check for that additional amount monthly. Another very 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. These options differ a little in reducing the final payback amount and shortening payback length, but they will all significantly reduce the length of your mortgage and lower the total interest you will pay over the life of the loan.
Some borrowers can't manage extra payments. But remember that most mortgages allow additional payments at any time. Whenever you come into unexpected cash, consider using this rule to pay an additional one-time payment on your mortgage principal.
For example: several years after buying your home, you get a larger than expected tax refund,a very large inheritance, or a non-taxable cash gift; , you could apply a portion of this money toward your mortgage loan principal, resulting in enormous savings and a shortened loan period. For most loans, even a small amount, paid early in the mortgage, could offer big savings in interest and in the length of the loan.
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