Here's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars over the course of your loan: Make extra payments that apply to your loan principal. You pay extra on principal in many different ways. For many people,Perhaps the easiest way to organize this process is by making 1 additional mortgage payment a year. If you can't pay an extra whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another option is to pay a half payment every two weeks. The effect here is that you will make one extra monthly payment in a 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.
It may not be possible for you to pay down your principal every month or even every year. But you should remember that most mortgage contracts will allow additional principal payments at any time. You can benefit from this rule to pay down your principal when you get some extra money. If, for example, you were to receive an unexpected windfall just a few years into your mortgage, you could apply a portion of this money toward your loan principal, which would result in enormous savings and a shorter payback period. For most loans, even a relatively modest amount, paid early enough in the loan period, could offer big savings in interest and in the duration of the loan.
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