Paying consistent additional payments on your principal balance provides big returns. Borrowers pay extra on principal by employing various techniques. Paying 1 extra full payment one time per year is probably the easiest to track. Of course, some people won't be able to pull off such a large additional expense, so dividing one additional payment into twelve additional monthly payments works as well. Another popular option is to pay half of your payment every other week. The effect here is that you will make one additional monthly payment each year. Each of these options yields slightly different results, but each will significantly reduce the length of your mortgage and lower the total interest paid over the duration of the loan.
Some folks can't manage any extra payments. But it's important to note that most mortgage contracts allow additional principal payments at any time. You can take advantage of this provision to pay down your mortgage principal when you get some extra money. Here's an example: several years after buying your home, you get a very large tax refund,a very large legacy, or a cash gift; , paying several thousand dollars into your home's principal will significantly shorten the period of your loan and save a huge amount on interest over the life of the mortgage loan. For most loans, even a relatively modest amount, paid early enough in the mortgage, could offer big savings in interest and in the length of the loan.
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