Making consistent extra payments on the loan principal yields huge returns. People make this happen in several different ways. Paying one additional payment one time a year is perhaps the simplest to track. But many people will not be able to swing such an enormous extra payment, so splitting one additional payment into twelve additional monthly payments is a great option too. Finally, you can pay a half payment every two weeks. These options differ a little in lowering the final payback amount and shortening payback length, but they will all significantly reduce the length of your mortgage and lower the total interest paid over the duration of the loan.
Some borrowers just can't make extra payments. But it's important to note that most mortgage contracts allow you to make additional principal payments at any time. You can take advantage of this rule to pay down your mortgage principal any time you come into extra money. If, for example, you receive a large gift or tax refund four years into your mortgage, investing a few thousand dollars into your home's principal can shorten the duration of your loan and save a huge amount on interest over the life of the loan. Unless the mortgage loan is very large, even a few thousand dollars applied early in the loan period can produce huge benefits over the duration of the loan.
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