Here's a simple trick to significantly reduce the length of your mortgage and save thousands over the course of your loan: Make additional payments which apply to your loan principal. Borrowers pay extra in several ways. For many people,Perhaps the simplest way to keep track is to make 1 extra payment a year. If you can't afford to pay an additional whole payment in one month, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Finally, you can commit to paying a half payment every two weeks. These options differ a little in lowering the total interest paid and reducing payback length, but they will all significantly reduce the length of your mortgage and lower your total interest paid.
Some people just can't make extra payments. But it's important to note that most mortgages will allow you to make additional principal payments at any time. Whenever you come into unexpected cash, consider using this provision to make a one-time additional payment toward principal. Here's an example: five years after buying your home, you get a larger than expected tax refund,a very large legacy, or a non-taxable cash gift; , investing a few thousand dollars into your mortgage principal can significantly reduce the duration of your loan and save enormously on interest over the life of the loan. For most loans, even this modest amount, paid early in the mortgage, could offer huge savings in interest and length of the loan.
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