Paying regular extra payments on the loan principal will yield big savings. 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 a year. But many folks won't be able to afford such a large additional payment, so dividing an additional payment into 12 additional monthly payments is a fine option too. Another option is to pay a half payment every other week. The effect here is that you will make one additional monthly payment every year. Each of these options yields different results, but each will significantly shorten the length of your mortgage and lower the total interest you will pay over the life of the loan.
Some borrowers just can't make any extra payments. But you should remember that most mortgage contracts will allow additional payments at any time. You can take advantage of this provision to pay down your principal when you come into extra money.
If, for example, you were to receive a large gift or tax refund just a few years into your mortgage, you could apply a portion of this windfall toward your loan principal, which would result in huge savings and a shortened loan period. For most loans, even this small amount, paid early enough in the loan period, could offer big savings in interest and in the duration of the loan.
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