Paying consistent additional payments toward your principal balance yields big savings. You can accomplish this in various ways. Making a single extra full payment one time a year is perhaps the easiest to track. But some people will not be able to afford this huge extra payment, so dividing one additional payment into twelve additional monthly payments works as well. Another very popular option is to pay a half payment every other week. The result is you make one extra monthly payment every year. Each of these options yields slightly different results, but they will all significantly shorten the length of your mortgage and lower the total interest paid over the life of the loan.
Some borrowers can't manage extra payments. But it's important to note that most mortgage contracts will allow you to make additional principal payments at any time. You can benefit from this provision to pay extra on your principal when you get some extra money. If, for example, you were to receive a large gift or tax refund just a few years into your mortgage, investing several thousand dollars into your mortgage principal will shorten the duration of your loan and save enormously on mortgage interest over the life of the mortgage loan. For most loans, even this relatively small amount, paid early in the mortgage, could offer huge savings in interest and in the length of the loan.
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