There's a trick to significantly reduce the length of your mortgage and save thousands in interest: Make additional payments that go toward the loan principal. Borrowers make this happen in several different ways. Making one extra payment one time per year may be the easiest to track. But many people won't be able to swing such an enormous extra payment, so dividing an additional payment into twelve extra monthly payments works too. Another popular option is to pay a half payment every two weeks. The effect here is that you make one extra monthly payment in a year. These options differ a little in reducing the final payback amount and reducing payback length, but each will significantly reduce the duration 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. But remember that most mortgages allow you to make additional principal payments at any time. You can benefit from this provision to pay down your principal any time you come into extra money.
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 home's principal will significantly reduce the repayment period of your loan and save a huge amount on interest paid over the life of the mortgage loan. Unless the loan is quite large, even a few thousand dollars applied early in the loan period can yield huge savings over the duration of the loan.
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