Paying regular extra payments toward your loan principal yields singificant returns. You can pay against principal by employing various techniques. Paying one additional payment one time every year is perhaps the easiest to track. If you can't pay an additional 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 commit to paying a half payment every two weeks. Each of these options produces slightly different results, but they will all significantly reduce the length of your mortgage and lower the total interest paid over the life of the loan.
It may not be possible for you to pay more every month or even every year. But you should remember that most mortgages allow additional payments at any time. You can take advantage of this rule to pay extra on your principal any time you come into extra money. If, for example, you receive an unexpected windfall three years into your mortgage, you could apply a portion of this money toward your loan principal, resulting in huge savings and a shortened payback period. For most loans, even a relatively modest amount, paid early enough in the loan period, could offer huge savings in interest and in the duration of the loan.
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