Making regular extra payments toward your principal yields singificant returns. People use different methods to accomplish this goal. Making 1 extra full payment one time a year may be the simplest to arrange. If you can't afford to pay an additional whole payment all at once, you can divide that payment by 12 and pay that additional amount monthly. Finally, you can pay a half payment every two weeks. Each of these options produces different results, but they will all significantly shorten the length of your mortgage and lower the total interest paid over the duration of the loan.
It may not be possible for you to pay more every month or even every year. Keep in mind that virtually all mortgages will permit you to pay extra on your principal at any point during repayment. Any time you get some unexpected cash, consider using this rule to make a one-time additional payment on principal.
For example: a few years after buying your home, you receive a larger than expected tax refund,a large inheritance, or a cash gift; , investing a few thousand dollars into your home's principal can shorten the repayment duration of your loan and save enormously on interest over the duration of the loan. For most loans, even this modest amount, paid early enough in the loan period, could offer huge savings in interest and duration of the loan.
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