Here's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars in interest: Make extra payments that apply to your principal. Borrowers can do this using a few different techniques. For many people,Perhaps the simplest way to keep track is by making one extra mortgage payment per year. But some people won't be able to afford such an enormous extra expense, so splitting an extra payment into 12 additional monthly payments is a great option too. Another option is to pay a half payment every other week. The result is you make one extra monthly payment every year. These options differ a little in reducing the total interest paid and shortening payback length, but each will significantly reduce the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay extra every month or even every year. But remember that most mortgage contracts allow you to make additional principal payments at any time. You can take advantage of this provision to pay down your principal any time you get some extra money.
If, for example, you were to receive a large gift or tax refund just a few years into your mortgage, you could apply this money toward your loan principal, resulting in huge savings and a shorter loan period. Unless the loan is quite large, even a few thousand dollars applied early can produce huge benefits over the life of the loan.
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