Making consistent extra payments on the principal yields huge savings. You pay more on principal in various ways. Paying 1 extra full payment once a year may be the simplest to keep track of. If you can't pay an extra whole payment in one month, you can divide your payment by 12 and pay that additional amount monthly. Another option is to pay a half payment every other week. The effect here is that you make one extra monthly payment in a year. These options differ a little in lowering the total interest paid and shortening payback length, but each will significantly reduce the length of your mortgage and lower your total interest paid.
Some people just can't make any extra payments. But it's important to note that most mortgages will allow you to make additional payments at any time. Whenever you get some unexpected cash, you can use this provision to pay a one-time additional payment toward mortgage principal.
Here's an example: five years after moving into your home, you get a huge tax refund,a very large legacy, or a cash gift; , you could apply this money toward your mortgage loan principal, resulting in huge savings and a shortened loan period. Unless the mortgage loan is quite large, even a few thousand dollars applied early in the loan period can produce huge benefits over the life of the loan.
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