Paying consistent additional payments toward your loan principal provides enormous savings. People use different methods to accomplish this goal. For many people,Perhaps the easiest way to keep track is to make one additional mortgage payment per year. However, many people won't be able to swing such a large extra expense, so dividing a single extra payment into 12 additional monthly payments is a great option too. Another very popular option is to pay half of your payment every two weeks. The effect here is that you will make one additional monthly payment every year. These options differ a little in reducing the total interest paid and shortening payback length, but they will all significantly shorten the length of your mortgage and lower the total interest you will pay over the duration of the loan.
It may not be possible for you to pay more every month or even every year. Keep in mind that most mortgages will allow you to make additional payments to your principal at any time. You can take advantage of this provision to pay extra on your principal any time you get some extra money.
If, for example, you receive a large gift or tax refund four years into your mortgage, you could pay this windfall toward your loan principal, resulting in significant savings and a shorter payback period. Unless the mortgage loan is very large, even a few thousand dollars applied early can yield huge benefits over the life of the loan.
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