There's a trick to significantly reduce the length of your mortgage and save thousands in interest: Make extra payments that go to your principal. Borrowers can do this in several ways. Paying one additional full payment once per year is likely the simplest to keep track of. But many people can't pull off such an enormous additional expense, so dividing a single additional payment into 12 additional monthly payments works as well. Finally, you can commit to paying a half payment every other week. Each option produces different results, but each will significantly shorten the length of your mortgage and lower your total interest paid.
It may not be possible for you to pay down your principal every month or even every year. But you should remember that most mortgage contracts allow you to make additional principal payments at any time. You can benefit from this provision to pay down your principal when you come into extra money. If, for example, you were to receive an unexpected windfall just a few years into your mortgage, you could pay a portion of this money toward your loan principal, which would result in enormous savings and a shortened payback period. For most loans, even a relatively modest amount, paid early in the loan period, could offer big savings in interest and duration of the loan.
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