Paying consistent extra payments toward the principal balance yields big savings. Borrowers use different methods to meet this goal. Making one additional payment one time per year may be the easiest to track. Of course, many folks can't afford such a large extra payment, so splitting a single extra payment into 12 additional monthly payments works too. Another popular option is to pay a half payment every two weeks. The result is you will make one extra monthly payment in a year. These options differ a little in reducing the final payback amount and reducing payback length, but they will all significantly shorten the length of your mortgage and lower your total interest paid.
Some folks can't manage extra payments. But it's important to note that most mortgages allow additional payments at any time. You can take advantage of this provision to pay down your principal any time you come into extra money. Here's an example: a few years after buying your home, you get a larger than expected tax refund,a very large inheritance, or a cash gift; , investing a few thousand dollars into your mortgage principal can shorten the duration of your loan and save enormously on interest over the duration of the mortgage loan. Unless the mortgage loan is quite large, even small amounts applied early in the loan period can produce huge benefits over the life of the loan.
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