Here's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars over the course of your loan: Make extra payments that go toward your loan principal. You can accomplish this in several ways. For many people,Perhaps the easiest way to organize this process is to make one additional payment per year. If you can't pay an additional whole payment in one month, you can divide your payment by 12 and pay that additional amount monthly. Another very popular option is to pay half of your payment every two weeks. The effect here is that you make one additional monthly payment in a year. Each of these options yields slightly different results, but each will significantly reduce the duration of your mortgage and lower your total interest paid.
Some people just can't make any extra payments. But remember that most mortgages allow you to make additional payments at any time. You can benefit from this provision to pay down your principal when you come into extra money. If, for example, you receive a large gift or tax refund just a few years into your mortgage, investing a few thousand dollars into your mortgage principal will significantly reduce the repayment period of your loan and save a huge amount on interest paid over the life of the loan. Unless the mortgage loan is quite large, even a few thousand dollars applied early can produce huge savings over the duration of the loan.
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