Making consistent additional payments toward the loan principal provides huge returns. Borrowers accomplish this goal in a few ways. Paying one extra payment one time every year may be the easiest to arrange. If you can't pay an additional whole payment all at once, you can divide that payment by 12 and write a check for that additional amount monthly. Another option is to pay half of your payment every two weeks. The result is you make one extra monthly payment in a year. These options differ slightly in lowering the final payback amount and shortening payback length, but they will all significantly reduce the duration of your mortgage and lower the total interest you will pay over the life of the loan.
It may not be possible for you to pay more every month or even every year. Remember that virtually all mortgages will allow you to make additional payments to your principal at any time. Whenever you come into unexpected cash, you can use this rule to pay a one-time additional payment on your principal. If, for example, you were to receive a large gift or tax refund five years into your mortgage, investing several thousand dollars into your mortgage principal will significantly reduce the repayment duration of your loan and save enormously on interest over the life of the loan. Unless the mortgage loan is quite large, even a few thousand dollars applied early can yield huge savings over the life of the loan.
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