Paying consistent extra payments toward your loan principal provides singificant savings. Borrowers can pay extra on principal by employing various techniques. Paying a single extra payment one time a year is likely the easiest to arrange. If you can't pay an extra whole payment in one month, you can divide that payment by 12 and write a check for that additional amount monthly. Finally, you can pay half of your mortgage payment every two weeks. Each of these options yields different results, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Some borrowers can't manage any extra payments. Keep in mind that virtually all mortgage contracts will allow you to pay extra on your principal at any time. Any time you come into unexpected cash, you can use this rule to pay an additional one-time payment toward mortgage principal.
For example: several years after moving into your home, you receive a very large tax refund,a large legacy, or a cash gift; , paying several thousand dollars into your home's principal can significantly shorten the period of your loan and save a huge amount on mortgage interest paid over the life of the loan. Unless the mortgage loan is quite large, even a few thousand dollars applied early in the loan period can yield huge benefits over the duration of the loan.
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