Making regular extra payments on your loan principal yields huge returns. You can pay extra on principal in various ways. For many people,Perhaps the easiest way to keep track is to make one extra mortgage payment per year. Of course, many folks will not be able to pull off this huge extra expense, so dividing one additional payment into twelve extra monthly payments works too. Finally, you can pay a half payment every other week. Each option produces slightly different results, but they will all significantly shorten the length of your mortgage and lower the total interest paid over the duration of the loan.
It may not be possible for you to pay extra every month or even every year. But you should remember that most mortgage contracts allow additional principal payments at any time. Whenever you come into extra money, consider using this rule to make a one-time additional payment toward your mortgage principal. For example: five years after buying your home, you get a huge tax refund,a very large legacy, or a non-taxable cash gift; , investing several thousand dollars into your home's principal will shorten the repayment period of your loan and save a huge amount on interest over the duration of the loan. Unless the mortgage loan is quite large, even small amounts applied early in the loan period can yield huge savings over the duration of the loan.
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