There's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars over the course of your loan: Make extra payments which are applied toward your loan principal. You pay against principal in many different ways. Paying a single additional full payment one time a year is likely the simplest to keep track of. If you can't pay an additional whole payment all at once, you can divide your payment by 12 and write a check for that additional amount monthly. Finally, you can commit to paying half of your mortgage payment every other week. These options differ slightly in lowering the total interest paid 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.
It may not be possible for you to pay down your principal every month or even every year. But it's important to note that most mortgages allow additional principal payments at any time. You can benefit from this provision to pay extra on your mortgage principal when you come into extra money. Here's an example: several years after moving into your home, you receive a very large tax refund,a very large legacy, or a non-taxable cash gift; , paying several thousand dollars into your mortgage principal will significantly reduce the period of your loan and save a huge amount on interest over the duration of the mortgage loan. Unless the mortgage loan is very large, even modest amounts applied early can produce huge savings over the duration of the loan.
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