There's a trick to significantly reduce the length of your mortgage and save you thousands of dollars over the course of your loan: Make additional payments that are applied toward the loan principal. People accomplish this goal in a few different ways. Making a single extra full payment one time per year may be the easiest to track. But some folks can't pull off such an enormous extra expense, so dividing an additional payment into 12 additional monthly payments works as well. Finally, you can pay a half payment every two weeks. These options differ slightly in lowering the total interest paid and reducing payback length, but each will significantly reduce the length of your mortgage and lower the total interest paid over the life of the loan.
Some borrowers can't manage any extra payments. Remember that most mortgages will allow you to make additional payments to your principal at any time. Any time you get some extra cash, consider using this provision to make a one-time additional payment toward your mortgage principal. If, for example, you were to receive a large gift or tax refund just a few years into your mortgage, you could pay a portion of this windfall toward your loan principal, which would result in significant savings and a shortened payback period. For most loans, even a modest amount, paid early in the mortgage, could offer big savings in interest and in the length of the loan.
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