There's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars in interest: Make extra payments which go toward the principal. You can pay more on principal in many different ways. Making a single 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. Finally, you can commit to paying a half payment every other week. These options differ slightly in lowering the final payback amount and reducing payback length, but each will significantly reduce the length of your mortgage and lower the total interest you will pay over the life of the loan.
Some people can't manage extra payments. But it's important to note that most mortgage contracts allow additional payments at any time. Any time you come into extra cash, you can use this rule to make an additional one-time payment toward your principal.
If, for example, you were to receive a large gift or tax refund five years into your mortgage, you could pay this windfall toward your loan principal, resulting in huge savings and a shortened payback period. For most loans, even a relatively modest amount, paid early in the loan period, could offer big savings in interest and duration of the loan.
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