Here's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars over the course of your loan: Make extra payments which go toward your loan principal. You can do this in several ways. For many people,Perhaps the simplest way to keep track is by making one extra mortgage payment a year. If you can't afford to pay an extra whole payment all at once, you can divide your payment by 12 and pay that additional amount monthly. Another very popular option is to pay a half payment every other week. The effect here is that you will make one additional monthly payment in a year. Each option yields different results, but each will significantly shorten the length of your mortgage and lower your total interest paid.
Some folks can't manage extra payments. But remember that most mortgage contracts will allow additional principal payments at any time. You can benefit from this rule to pay down your mortgage principal when you come into extra money.
If, for example, you receive an unexpected windfall four years into your mortgage, you could pay a portion of this windfall toward your loan principal, which would result in huge savings and a shorter loan period. For most loans, even this relatively modest amount, paid early in the mortgage, could offer huge savings in interest and in the duration of the loan.
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