Making consistent extra payments toward your loan principal provides enormous savings. People accomplish this goal in a few different ways. Making a single additional payment one time every year is probably the easiest to arrange. Of course, many folks will not be able to swing such a large extra payment, so splitting one additional payment into twelve additional monthly payments works too. Finally, you can commit to paying half of your mortgage payment every other week. Each of these options produces different results, but they will all significantly reduce the length of your mortgage and lower the total interest you will pay over the duration of the loan.
It may not be possible for you to pay more every month or even every year. But remember that most mortgages allow you to make additional payments at any time. Whenever you come into unexpected cash, consider using this rule to make an additional one-time payment on principal. If, for example, you receive an unexpected windfall five years into your mortgage, investing several thousand dollars into your mortgage principal can shorten the duration of your loan and save enormously on interest paid over the duration of the loan. For most loans, even this small amount, paid early in the mortgage, could offer huge savings in interest and length of the loan.
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