Paying consistent additional payments on your principal can yield singificant returns. Borrowers can accomplish this using a few different techniques. For many people,Perhaps the easiest way to keep track is to make one extra mortgage payment per year. However, some people can't pull off this huge additional expense, so splitting an extra payment into 12 additional monthly payments is a great option too. Finally, you can pay a half payment every two weeks. These options differ slightly in lowering the total interest paid and shortening payback length, but each will significantly reduce the length of your mortgage and lower the total interest paid over the life of the loan.
It may not be possible for you to pay more every month or even every year. Keep in mind that almost all mortgages will permit you to make additional payments to your principal at any time. You can benefit from this rule to pay down your principal when you get some extra money.
Here's an example: several years after moving into your home, you get a very large tax refund,a large legacy, or a non-taxable cash gift; , investing several thousand dollars into your home's principal will significantly reduce the period of your loan and save a huge amount on mortgage interest paid over the duration of the loan. For most loans, even a relatively modest amount, paid early enough in the mortgage, could offer big savings in interest and length of the loan.
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