Making consistent additional payments toward your principal yields huge returns. Borrowers can do this in several ways. Paying one additional full payment once a year is likely the simplest to keep track of. But many folks will not be able to swing this huge extra expense, so splitting a single additional payment into 12 extra monthly payments is a great option too. Finally, you can pay a half payment every other week. Each option produces slightly different results, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
It may not be possible for you to pay more every month or even every year. But you should remember that most mortgages allow you to make additional payments at any time. Whenever you get some extra money, you can use this provision to make a one-time additional payment on your mortgage principal. If, for example, you receive a very large gift or tax refund four years into your mortgage, paying a few thousand dollars into your mortgage principal will significantly reduce the duration of your loan and save a huge amount on mortgage interest over the duration of the loan. Unless the loan is quite large, even a few thousand dollars applied early can yield huge savings over the life of the loan.
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