Paying consistent extra payments toward your loan principal yields enormous returns. Borrowers pay more on principal by employing various techniques. For many people,Perhaps the simplest way to organize this process is to make one extra mortgage payment every year. However, some people won't be able to pull off this huge extra payment, so splitting one extra payment into twelve extra monthly payments works as well. Another very popular option is to pay a half payment every other week. The result is you will make one extra monthly payment every year. Each option produces slightly different results, but each will significantly shorten the duration 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. Keep in mind that almost all mortgage contracts will permit you to pay extra on your principal at any time. Any time you come into extra cash, you can use this provision to make an additional one-time payment toward principal. For example: five years after moving into your home, you get a very large tax refund,a very large legacy, or a cash gift; , investing a few thousand dollars into your mortgage principal can significantly shorten the repayment period of your loan and save a huge amount on interest paid over the life of the loan. For most loans, even this relatively modest amount, paid early enough in the loan period, could offer huge savings in interest and in the length of the loan.
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