Paying consistent additional payments toward the principal balance provides enormous returns. You pay extra on principal by employing various techniques. Making a single extra full payment once per year is likely the simplest to keep track of. If you can't pay an additional whole payment all at once, you can divide that payment by 12 and pay that additional amount monthly. Finally, you can pay a half payment every other week. These options differ a little in lowering the final payback amount and shortening payback length, but they will all significantly shorten the length of your mortgage and lower the total interest you will pay over the life of the loan.
Some borrowers just can't make extra payments. But remember that most mortgage contracts allow you to make additional payments at any time. You can benefit from this provision to pay extra on your mortgage principal when you come into extra money. Here's an example: several years after moving into your home, you get a very large tax refund,a very large inheritance, or a non-taxable cash gift; , you could pay this windfall toward your loan principal, which would result in huge savings and a shortened loan period. Unless the loan is quite large, even a few thousand dollars applied early in the loan period can yield huge benefits over the duration of the loan.
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