There's a trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make extra payments which go to the principal. Borrowers pay extra on principal by employing various techniques. Making a single additional full payment one time a year is likely the simplest to track. If you can't afford to pay an additional whole payment in one month, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Another popular option is to pay half of your payment every other week. The result is you will make one additional monthly payment each year. These options differ a little in lowering the total interest paid and shortening 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 more every month or even every year. But you should remember that most mortgages will allow additional principal payments at any time. Whenever you come into extra money, consider using this provision to make an additional one-time payment on mortgage principal.
For example: five years after moving into your home, you get a huge tax refund,a large inheritance, or a cash gift; , you could pay a portion of this money toward your loan principal, resulting in enormous savings and a shorter loan period. For most loans, even this relatively modest amount, paid early enough in the loan period, could offer huge savings in interest and length of the loan.
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