Making regular additional payments toward the principal yields huge savings. You can pay extra on principal in various ways. For many people,Perhaps the easiest way to keep track is by making one extra mortgage payment per year. However, many people can't swing such a large additional payment, so dividing one extra payment into twelve additional monthly payments works too. Another very popular option is to pay a half payment every two weeks. The result is you make one extra monthly payment every year. Each of these options produces 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 extra payments. Keep in mind that almost all mortgage contracts 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 principal any time you get some extra money.
If, for example, you were to receive a very large gift or tax refund just a few years into your mortgage, you could pay this windfall toward your mortgage loan principal, which would result in enormous savings and a shorter payback period. For most loans, even this relatively modest amount, paid early in the mortgage, could offer big savings in interest and length of the loan.
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