There's a trick to significantly reduce the length of your mortgage and save you thousands of dollars over the course of your loan: Make additional payments which apply to the loan principal. Borrowers make this happen in a few ways. For many people,Perhaps the simplest way to organize this process is by making one additional mortgage payment a year. However, some folks can't swing this huge extra expense, so dividing an extra payment into 12 additional monthly payments works too. Another option is to pay a half payment every two weeks. The effect here is that you will make one additional monthly payment each year. Each of these options yields different results, but they will all significantly shorten the length of your mortgage and lower the total interest you will pay over the duration of the loan.
It may not be possible for you to pay down your principal every month or even every year. But it's important to note that most mortgages will allow additional principal payments at any time. Any time you come into extra money, you can use this rule to make a one-time additional payment toward principal.
If, for example, you receive a large gift or tax refund three years into your mortgage, investing a few thousand dollars into your mortgage principal will significantly shorten the period of your loan and save enormously on interest paid over the life of the mortgage loan. Unless the mortgage loan is quite large, even a few thousand dollars applied early can yield huge benefits over the duration of the loan.
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