Making regular additional payments on your principal balance can yield big savings. Borrowers use different methods to accomplish this goal. Paying a single additional full payment once per year is likely the easiest to keep track of. If you can't afford to pay an additional whole payment in one month, you can divide that payment by 12 and pay that additional amount monthly. Another very popular option is to pay a half payment every two weeks. The result is you make one extra monthly payment each year. Each option yields different results, but each will significantly shorten the length of your mortgage and lower the total interest paid over the life of the loan.
Some folks can't manage extra payments. But it's important to note that most mortgage contracts allow additional payments at any time. You can take advantage of this rule to pay extra on your mortgage principal when you come into extra money.
If, for example, you receive a very large gift or tax refund five years into your mortgage, investing a few thousand dollars into your home's principal will significantly shorten the repayment duration of your loan and save a huge amount on interest over the duration of the mortgage loan. Unless the loan is very large, even a few thousand dollars applied early in the loan period can produce huge savings over the life of the loan.
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