Making regular extra payments toward your loan principal provides enormous returns. Borrowers make this happen in a few ways. Making one extra payment one time every year may be the simplest to track. If you can't pay an additional whole payment in one month, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Finally, you can pay half of your mortgage payment every other week. Each option produces slightly different results, but each will significantly shorten the duration of your mortgage and lower the total interest you will pay over the life of the loan.
Some borrowers can't manage any extra payments. Keep in mind that virtually all mortgage contracts will permit you to make additional payments to your principal at any time. Whenever you come into unexpected cash, consider using this provision to make an additional one-time payment on your mortgage principal.
If, for example, you were to receive a very large gift or tax refund five years into your mortgage, you could pay this money toward your mortgage loan principal, resulting in enormous savings and a shorter loan period. For most loans, even this relatively small amount, paid early enough in the mortgage, could offer huge savings in interest and length of the loan.
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