Making regular extra payments toward your principal balance will yield huge returns. Borrowers employ various techniques to accomplish this goal. Paying 1 additional full payment one time a year is likely the easiest to arrange. If you can't afford to pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another option is to pay a half payment every other week. The result is you make one additional monthly payment every year. These options differ a little in reducing the total interest paid and shortening payback length, but they will all significantly shorten the length of your mortgage and lower your total interest paid.
Some people just can't make extra payments. Keep in mind that almost all mortgages will allow you to pay extra on your principal at any time. Any time you get some unexpected cash, consider using this rule to pay a one-time additional payment toward your mortgage principal.
If, for example, you receive a large gift or tax refund four years into your mortgage, you could apply a portion of this windfall toward your loan principal, resulting in enormous savings and a shortened payback period. Unless the loan is very large, even a few thousand dollars applied early in the loan period can produce huge savings over the duration of the loan.
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