Paying an additional
a month will save you
with an earlier payoff schedule of
The annual cost to borrow money from a lender based on a percentage of the loan amount. Interest rates exclude mortgage "points" and fees charged to get the loan.
Length of Loan
The original fixed length of time (usually expressed in years) that a borrower agrees to pay on a mortgage loan until it is paid in full. Common loan terms are 15, 20, and 30 years.
Original Loan Amount
The original amount borrowed from a lender to obtain a mortgage loan. This represents the total mortgage amount including fees, points, etc… as stated on the closing disclosure.
The combined total amount saved on interest and principal over the life of the loan. This amount excludes additional savings on fees or property tax as a result of a shorter payoff date.
The amount of time saved on the current loan schedule by making additional payments toward the principal mortgage balance.
Additional Principal Payment
Extra payments applied to the mortgage above the monthly requirement. These payments are typically used to settle existing late charges or fees before being applied to the principal.
Is making extra mortgage payments a good idea?
It ultimately depends on your situation and financial goals. If you plan to stay in your home for years to come, you may be able to shorten your term by several years. However, borrowers who intend to move in the next few years likely won’t benefit much from making extra mortgage payments.
Are there other ways to save on interest?
Yes! Consider applying any extra funds at the end of the month toward your loan balance. Even paying an extra $50 or $100 a month allows you to pay off your mortgage faster.
Another idea is to refinance to a 15-year mortgage. Though your payments will be a bit higher, your overall savings will be greater. The shorter loan term also means that you’ll pay off your home loan in a fraction of the time.