Paying consistent additional payments toward the loan principal yields big savings. You can pay against principal by employing various techniques. For many people,Perhaps the easiest way to keep track is to make one extra mortgage payment per year. But many folks won't be able to pull off such an enormous extra payment, so splitting an extra payment into twelve additional monthly payments is a great option too. Finally, you can commit to paying a half payment every other week. These options differ slightly in reducing 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 you to make additional payments at any time. Whenever you come into extra money, consider using this rule to make an additional one-time payment on your principal. If, for example, you receive a very large gift or tax refund five years into your mortgage, you could apply a portion of this windfall toward your loan principal, resulting in huge savings and a shorter loan period. For most loans, even a relatively small amount, paid early enough in the loan period, could offer huge savings in interest and in the length of the loan.
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