Paying regular extra payments on your principal will provide big returns. Borrowers pay more on principal by employing various techniques. Making a single additional payment one time per year may be the easiest to keep track of. If you can't afford to pay an additional whole payment in one month, you can divide that payment by 12 and pay that additional amount monthly. Another popular option is to pay a half payment every other week. The result is you make one extra monthly payment each year. These options differ a little in reducing the total interest paid and reducing payback length, but each will significantly shorten the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay down your principal every month or even every year. But you should remember that most mortgage contracts will allow additional payments at any time. You can benefit from this provision to pay down your principal when you get some extra money. For example: several years after moving into your home, you get a very large tax refund,a large inheritance, or a non-taxable cash gift; , you could apply this windfall toward your loan principal, resulting in enormous savings and a shortened payback period. For most loans, even a small amount, paid early enough in the mortgage, could offer huge savings in interest and in the duration of the loan.
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