Paying regular extra payments toward your principal balance provides enormous savings. Borrowers accomplish this goal in a few ways. Paying one additional full payment one time every year is probably the simplest to track. If you can't pay an extra 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 will make one additional monthly payment each year. These options differ slightly in reducing the total interest paid and shortening payback length, but each will significantly shorten the length of your mortgage and lower the total interest paid over the duration of the loan.
Some folks can't manage extra payments. But it's important to note that most mortgage contracts will allow additional principal payments at any time. You can benefit from this provision to pay extra on your mortgage principal any time you get some extra money.
Here's an example: several years after moving into your home, you get a huge tax refund,a large legacy, or a cash gift; , you could apply a portion of this windfall toward your loan principal, resulting in significant savings and a shorter payback period. Unless the loan is very large, even small amounts applied early can yield huge benefits over the duration of the loan.
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