Paying regular extra payments toward your loan principal yields huge savings. Borrowers pay more on principal by employing various techniques. For many people,Perhaps the simplest way to keep track is to make one extra mortgage payment per year. But many people will not be able to pull off this huge additional expense, so dividing an extra payment into twelve additional monthly payments is a great option too. Another option is to pay a half payment every two weeks. The effect here is that you make one additional monthly payment every year. Each of these options produces different results, but they will all 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 down your principal every month or even every year. Remember that almost all mortgages will permit you to make additional payments to your principal at any point during repayment. Whenever you get some extra money, consider using this rule to pay a one-time additional payment toward your mortgage principal. If, for example, you were to receive a very large gift or tax refund four years into your mortgage, paying several thousand dollars into your mortgage principal will significantly shorten the period of your loan and save a huge amount on interest over the duration of the loan. For most loans, even a relatively modest amount, paid early enough in the loan period, could offer big savings in interest and duration of the loan.
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