Making regular additional payments toward the loan principal can yield enormous returns. You can do this using a few different techniques. For many people,Perhaps the easiest way to keep track is to make one additional payment per year. If you can't pay an extra whole payment all at once, you can split that large amount into 12 smaller payments and write a check for that additional amount monthly. Finally, you can pay a half payment every other week. These options differ slightly in reducing the total interest paid and reducing payback length, but each will significantly reduce the duration of your mortgage and lower the total interest paid over the duration of the loan.
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 will allow you to make additional payments at any time. You can benefit from this provision to pay down your principal any time you come into extra money. If, for example, you were to receive a very large gift or tax refund four years into your mortgage, you could pay this money toward your loan principal, resulting in significant savings and a shorter payback period. For most loans, even this small amount, paid early enough in the loan period, could offer huge savings in interest and in the length of the loan.
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