Paying consistent additional payments on your principal balance yields singificant savings. People use different methods to meet this goal. Paying one additional full payment one time a year may be the easiest to arrange. But many folks won't be able to afford such a large additional expense, so dividing one extra payment into 12 additional monthly payments is a great option too. Another very popular option is to pay half of your payment every other week. The effect here is that you will make one additional monthly payment every year. These options differ a little in reducing 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 duration of the loan.
Some borrowers just can't make any extra payments. But it's important to note that most mortgages allow you to make additional payments at any time. You can benefit from this provision to pay down your mortgage principal any time you come into extra money. If, for example, you were to receive a large gift or tax refund three years into your mortgage, you could apply a portion of this money toward your mortgage loan principal, which would result in significant savings and a shorter payback period. For most loans, even this relatively modest amount, paid early in the mortgage, could offer huge savings in interest and length of the loan.
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