Here's a simple trick to significantly reduce the length of your mortgage and save you thousands over the course of your loan: Make extra payments that go toward your principal. You can do this in several ways. Making 1 additional full payment once a year is probably the simplest to arrange. If you can't afford to pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Another popular option is to pay half of your payment every two weeks. The result is you make one extra monthly payment every year. These options differ a little in lowering the total interest paid and shortening payback length, but they will all significantly reduce the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay more every month or even every year. Remember that almost all mortgage contracts will allow you to make additional payments to your principal at any time. You can take advantage of this provision to pay extra on your principal any time you get some extra money.
For example: a few years after moving into your home, you get a larger than expected tax refund,a very large inheritance, or a non-taxable cash gift; , you could apply this money toward your mortgage loan principal, which would result in significant savings and a shorter payback period. Unless the mortgage loan is very large, even a few thousand dollars applied early in the loan period can yield huge savings over the life of the loan.
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