Here's a simple trick to significantly reduce the length of your mortgage and save thousands over the course of your loan: Make extra payments that are applied to the loan principal. Borrowers can do this using a few different techniques. For many people,Perhaps the simplest way to keep track is to make 1 additional mortgage payment a year. However, many folks will not be able to swing this huge additional expense, so splitting one additional payment into 12 additional monthly payments is a fine option too. Another popular option is to pay half of your payment every two weeks. The result is you make one additional 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 length of your mortgage and lower the total interest paid over the life of the loan.
It may not be possible for you to pay down your principal every month or even every year. But you should remember that most mortgage contracts will allow you to make additional principal payments at any time. You can take advantage of 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 larger than expected tax refund,a large legacy, or a cash gift; , you could apply a portion of this money toward your loan principal, which would result in enormous savings and a shortened loan period. For most loans, even a relatively small amount, paid early enough in the mortgage, could offer huge savings in interest and in the duration of the loan.
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