Paying regular extra payments toward the principal provides huge returns. Borrowers pay extra in a few ways. Making 1 additional payment once every year is probably the easiest to arrange. If you can't pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Another very popular option is to pay a half payment every other week. The result is you make one additional monthly payment each year. These options differ a little in reducing the final payback amount and reducing payback length, but they will all significantly reduce the length of your mortgage and lower the total interest you will pay over the life of the loan.
It may not be possible for you to pay down your principal every month or even every year. But remember that most mortgages will allow you to make additional payments at any time. Whenever you get some unexpected money, you can use this provision to make an additional one-time payment toward your principal.
For example: a few years after moving into your home, you get a larger than expected tax refund,a large inheritance, or a cash gift; , investing a few thousand dollars into your home's principal can reduce the duration of your loan and save enormously on interest over the life of the loan. For most loans, even a modest amount, paid early enough in the loan period, could offer big savings in interest and in the length of the loan.
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