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 extra payments that apply to your loan principal. You can accomplish this in various ways. For many people,Perhaps the easiest way to keep track is to make one extra payment per year. Of course, some folks will not be able to afford such an enormous extra expense, so dividing an additional payment into 12 additional monthly payments is a great option too. Another very popular option is to pay half of your payment every two weeks. The effect here is that you will make one extra monthly payment in a year. Each of these options yields different results, but each will significantly reduce the duration of your mortgage and lower the total interest you will pay over the life of the loan.
Some folks can't manage extra payments. Remember that virtually all mortgage contracts will allow you to pay extra on your principal at any point during repayment. You can take advantage of this provision to pay down your principal when you come into extra money. Here's an example: a few years after moving into your home, you receive a very large tax refund,a large legacy, or a non-taxable cash gift; , you could apply this money toward your loan principal, resulting in enormous savings and a shortened payback period. For most loans, even this modest amount, paid early enough in the mortgage, could offer huge savings in interest and duration of the loan.
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