Making consistent additional payments toward your principal can yield enormous returns. Borrowers use different methods to meet this goal. Paying 1 extra full payment once a year is probably the simplest to keep track of. However, many folks won't be able to afford such an enormous extra payment, so dividing a single additional payment into twelve additional monthly payments is a fine option too. Another popular option is to pay half of your payment every two weeks. The effect here is that you make one extra monthly payment every year. These options differ a little in lowering the final payback amount and shortening payback length, but each will significantly reduce the duration of your mortgage and lower the total interest you will pay over the duration of the loan.
Some folks can't manage extra payments. Remember that most mortgage contracts will allow you to make additional payments to your principal at any time. You can take advantage of this provision to pay down your mortgage principal any time you get some extra money. If, for example, you were to receive a large gift or tax refund five years into your mortgage, you could apply this windfall toward your loan principal, resulting in enormous savings and a shorter payback period. For most loans, even a small amount, paid early enough in the loan period, could offer big savings in interest and duration of the loan.
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