There's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars in interest: Make extra payments which go to the loan principal. You can pay against principal in many different ways. Making a single additional full payment once every year is perhaps the simplest to keep track of. However, some folks won't be able to pull off such an enormous additional payment, so splitting an extra payment into twelve extra monthly payments is a fine option too. Finally, you can pay a half payment every two weeks. These options differ a little in lowering the total interest paid and reducing payback length, but each will significantly reduce the length of your mortgage and lower the total interest paid over the duration of the loan.
It may not be possible for you to pay extra 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 extra on your principal any time you come into extra money. Here's an example: a few years after moving into your home, you get a huge tax refund,a very large inheritance, or a cash gift; , you could pay this windfall toward your mortgage loan principal, which would result in huge savings and a shorter payback period. For most loans, even this relatively small amount, paid early in the loan period, could offer big savings in interest and in the duration of the loan.
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