Here's a simple trick to significantly reduce the length of your mortgage and save thousands of dollars in interest: Make extra payments that are applied to the principal. You can do this using a few different techniques. For many people,Perhaps the simplest way to organize this process is by making 1 extra payment a year. If you can't afford to pay an additional whole payment all at once, you can split that large amount into 12 smaller payments and pay that additional amount monthly. Another popular option is to pay half of your payment every other week. The effect here is that you make one extra monthly payment each year. These options differ a little in reducing the total interest paid 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.
It may not be possible for you to pay more every month or even every year. But remember that most mortgages will allow you to make additional principal payments at any time. You can benefit from this rule to pay extra on your mortgage principal any time you come into extra money. If, for example, you receive a large gift or tax refund five years into your mortgage, you could pay a portion of this money toward your loan principal, which would result in significant savings and a shorter payback period. Unless the loan is very large, even a few thousand dollars applied early can yield huge savings over the duration of the loan.
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