See how much interest you can save and how much earlier you can pay off your mortgage by making extra payments.
Even small extra payments can dramatically reduce your total interest and shorten your loan term. Because mortgage interest is front-loaded, extra principal payments early in the loan have the biggest impact.
Before making extra payments, ensure you have an emergency fund and are not carrying higher-interest debt (like credit cards). Some lenders charge prepayment penalties — check your loan terms.
Because mortgage interest is front-loaded — you pay the most interest in the early years — even a small extra payment each month can dramatically reduce your total interest and shorten your loan term.
Make sure you have an emergency fund and are not carrying higher-interest debt like credit cards. Also check whether your lender charges prepayment penalties.
A: An extra $100 per month on a $250,000 30-year loan at 6.5% can save over $40,000 in interest and pay off the loan 5+ years early.
A: Compare your mortgage interest rate to your expected investment return. If investments earn more, investing may be better — but paying down debt is guaranteed.
A: Yes, as long as you specify the extra amount is for principal. Otherwise lenders may apply it to future payments or escrow.