Here's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars in interest: Make additional payments which are applied toward your loan principal. Borrowers can do this in several ways. Paying one additional payment once a year may be the easiest to track. Of course, some folks can't swing such an enormous additional payment, so dividing one additional payment into 12 extra monthly payments is a great option too. Another popular option is to pay half of your payment every two weeks. The effect here is that you make one additional monthly payment every year. These options differ a little in lowering the final payback amount and shortening payback length, but each will significantly shorten the duration of your mortgage and lower the total interest paid over the duration of the loan.
Some borrowers just can't make any extra payments. Keep in mind that almost all mortgages will allow you to make additional payments to your principal at any point during repayment. You can take advantage of this rule to pay down your mortgage principal any time you come into extra money. Here's an example: several years after buying your home, you get a huge tax refund,a very large inheritance, or a non-taxable cash gift; , you could apply this money toward your mortgage loan principal, resulting in enormous savings and a shortened loan period. For most loans, even a relatively small amount, paid early enough in the mortgage, could offer huge savings in interest and in the length of the loan.
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