Here's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars in interest: Make extra payments which are applied toward the principal. Borrowers pay against principal by employing various techniques. Making one additional full payment one time per year is likely the easiest to keep track of. If you can't afford to pay an additional whole payment all at once, you can divide your payment by 12 and pay that additional amount monthly. Another popular option is to pay a half payment every two weeks. The effect here is that you will make one extra monthly payment in a year. These options differ a little in lowering the final payback amount and reducing payback length, but they will all significantly shorten the length of your mortgage and lower the total interest paid over the duration of the loan.
Some people just can't make any extra payments. But it's important to note that most mortgages allow you to make additional principal payments at any time. Any time you come into extra money, you can use this provision to pay a one-time additional payment on mortgage principal. If, for example, you were to receive a large gift or tax refund just a few years into your mortgage, investing several thousand dollars into your home's principal can significantly reduce the duration of your loan and save enormously on interest over the duration of the loan. Unless the loan is quite large, even small amounts applied early in the loan period can yield huge benefits over the life of the loan.
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