Paying regular additional payments on the principal will yield big savings. People use different methods to accomplish this goal. Paying a single additional full payment one time per year is perhaps the easiest to track. But many folks won't be able to afford this huge extra expense, so splitting one extra payment into 12 extra monthly payments works as well. Another option is to pay half of your payment every other week. The result is you make one additional monthly payment in a year. Each option produces different results, but each will significantly shorten the duration of your mortgage and lower the total interest paid over the duration of the loan.
Some borrowers can't manage extra payments. But you should remember that most mortgages will allow additional payments at any time. Any time you come into unexpected cash, you can use this rule to pay a one-time additional payment on your principal.
If, for example, you were to receive a very large gift or tax refund five years into your mortgage, investing several thousand dollars into your home's principal will significantly shorten the duration of your loan and save a huge amount on interest paid over the life of the loan. Unless the loan is quite large, even modest amounts applied early can yield huge savings over the life of the loan.
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