Additional Payments Provide Big Mortgage Savings
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Making consistent additional payments on the principal balance provides enormous returns. People use different methods to meet this goal. For many people,Perhaps the easiest way to keep track is to make one additional payment a year. However, many folks can't afford such a large extra expense, so splitting an extra payment into twelve extra monthly payments works too. Another option is to pay half of your payment every other week. The result is you make one additional monthly payment each year. Each of these options produces slightly different results, but each will significantly shorten the duration of your mortgage and lower your total interest paid.
Lump Sum Extra Payment
It may not be possible for you to pay more every month or even every year. But it's important to note that most mortgage contracts allow you to make additional payments at any time. You can benefit from this provision to pay down your principal when 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 enormous savings and a shortened loan period. For most loans, even a relatively modest amount, paid early enough in the mortgage, could offer big savings in interest and duration of the loan.