Paying consistent additional payments on your principal yields significant returns. You can do this using a few different techniques. Paying one extra full payment once every year is likely the simplest to track. But many folks won't be able to swing such an enormous extra expense, so splitting one extra payment into 12 additional monthly payments is a fine option too. Another very popular option is to pay half of your payment every other week. The result is you make one additional monthly payment in a year. Each of these options yields slightly different results, but each will significantly reduce the duration of your mortgage and lower the total interest paid over the duration of the loan.
Some folks just can't make extra payments. But you should remember that most mortgages will allow you to make additional payments at any time. Any time you get some extra money, you can use this rule to make a one-time additional payment toward your principal. If, for example, you receive a large gift or tax refund just a few years into your mortgage, you could apply a portion of this windfall toward your loan principal, which would result in significant 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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