Here's a simple trick to reduce the repayment period of your mortgage and save thousands of dollars over the course of your loan: Make extra payments that go to your principal. You pay against principal by employing various techniques. For many people,Perhaps the simplest way to keep track is by making 1 additional mortgage payment every year. But some folks won't be able to afford this huge extra expense, so splitting a single additional payment into 12 additional monthly payments is a fine option too. Another very popular option is to pay a half payment every other week. The result is you make one additional monthly payment every year. These options differ a little in reducing the total interest paid and reducing 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. Keep in mind that almost all mortgages will allow you to make additional payments to your principal at any time. Any time you come into unexpected money, consider using this rule to make a one-time additional payment on mortgage principal. For example: several years after moving into your home, you get a very large tax refund,a large legacy, or a non-taxable cash gift; , investing a few thousand dollars into your home's principal can shorten the duration of your loan and save a huge amount on interest paid over the life of the mortgage loan. For most loans, even a small amount, paid early in the loan period, could offer huge savings in interest and in the duration of the loan.
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