Paying regular extra payments toward the principal provides significant returns. Borrowers can pay extra on principal in various ways. For many people,Perhaps the simplest way to organize this process is to make one additional mortgage payment per year. If you can't pay an extra whole payment all at once, you can divide your payment by 12 and write a check for that additional amount monthly. Another option is to pay a half payment every two weeks. The result is you make one extra monthly payment every year. These options differ a little in lowering the final payback amount and shortening payback length, but each will significantly reduce the length of your mortgage and lower the total interest paid over the life of the loan.
Some folks can't manage any extra payments. But remember that most mortgages allow you to make additional payments at any time. Any time you come into unexpected money, you can use this provision to pay a one-time additional payment toward your principal. Here's an example: five years after moving into your home, you receive a larger than expected tax refund,a very large legacy, or a cash gift; , you could pay this money toward your loan principal, which would result in significant savings and a shorter payback period. For most loans, even a modest amount, paid early enough in the loan period, could offer huge savings in interest and duration of the loan.
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