Save Big on Your Mortgage
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There's a simple trick to significantly reduce the length of your mortgage and save you thousands of dollars in interest: Make extra payments that apply toward the principal. People pay extra in a few different ways. For many people,Perhaps the easiest way to organize this process is to make one extra mortgage payment every year. However, some people won't be able to pull off such a large additional payment, so dividing a single additional payment into twelve additional monthly payments works as well. Another very popular option is to pay half of your payment every two weeks. The result is you will make one additional monthly payment each year. These options differ slightly in lowering the final payback amount and reducing payback length, but they will all significantly shorten the length of your mortgage and lower your total interest paid.
Lump Sum Extra Payment
It may not be possible for you to pay extra every month or even every year. Keep in mind that most mortgages will permit you to make additional payments to your principal at any time. Any time you come into unexpected cash, consider using this provision to pay an additional one-time payment on your mortgage principal. If, for example, you receive a very large gift or tax refund just a few years into your mortgage, investing several thousand dollars into your mortgage principal can shorten the repayment duration of your loan and save a huge amount on interest paid over the life of the mortgage loan. Unless the mortgage loan is quite large, even modest amounts applied early in the loan period can yield huge benefits over the life of the loan.