Making consistent extra payments on the principal will provide singificant returns. Borrowers pay more on principal in many different ways. Paying one extra full payment once every year is perhaps the easiest to keep track of. However, some folks won't be able to afford such a large extra expense, so splitting an additional payment into 12 extra monthly payments works as well. Another option is to pay half of your payment every other week. The effect here is that you make one extra monthly payment every year. Each of these options produces different results, but each will significantly shorten the length of your mortgage and lower your total interest paid.
Some people just can't make any extra payments. But remember that most mortgages will allow additional principal payments at any time. You can take advantage of this rule to pay extra on your mortgage principal any time you come into extra money.
Here's an example: a few years after buying your home, you receive a very large tax refund,a large inheritance, or a non-taxable cash gift; , you could apply this windfall toward your loan principal, resulting in huge savings and a shorter loan period. For most loans, even this relatively small amount, paid early in the loan period, could offer huge savings in interest and length of the loan.
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