Making consistent additional payments toward the principal balance can yield singificant returns. Borrowers can do this in various ways. For many people,Perhaps the simplest way to keep track is to make 1 extra mortgage payment a year. But many folks will not be able to pull off such an enormous additional expense, so splitting a single extra payment into twelve additional monthly payments works as well. Another popular option is to pay a half payment every two weeks. The result is you will make one extra monthly payment each year. These options differ slightly in lowering the final payback amount and shortening payback length, but each will significantly shorten the length of your mortgage and lower your total interest paid.
Some folks just can't make any extra payments. Remember that most mortgages will allow you to pay extra on your principal at any time. Any time you come into extra money, consider using this rule to make an additional one-time payment on your mortgage principal.
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 non-taxable cash gift; , investing several thousand dollars into your home's principal can shorten the period of your loan and save a huge amount on mortgage interest paid over the life of the loan. For most loans, even this small amount, paid early in the mortgage, could offer huge savings in interest and duration of the loan.
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