This is a simple way to significantly reduce the length of your mortgage and save you thousands of dollars. That is, to make one extra mortgage payment a year and apply that payment toward your loan's principal.

This is the method being used by some companies offering Bi-Weekly Mortgage Plans. When you do it yourself, you don't pay a third party unnecessary set-up costs and fees!

Example: $100,000 loan, 30-year mortgage, 6.5% fixed interest rate

It may not be possible for you to increase your monthly mortgage payment. Keep in mind that most mortgages will permit you to make additional payments to your principal at anytime. Maybe after moving into your home you receive a large unexpected tax return, or an inheritance, or other extra cash. You could apply this money toward your loan's principal, resulting in significant savings and a shorter loan period.

With a $100,000, 30-year, 6.5% fixed interest rate mortgage loan, the borrower will pay a total of $227,542.98 to pay back the loan in 30 years. That equals $127,542.98 in interest payments.

If the same borrower makes a one-time $5,000 payment the first day of year 6, he/she will pay a total of $204,710.75 and pay off the loan in 27 years (324 months). That's a savings of $22,832.23 in interest.

To look at different scenarios go to Extra Payment Calculator

BACK TO FAQ

Purchase,  Refinance, Debt Consolidation,  Calculators,  Get Pre-Approved,  Commercial,  FAQ (& Some Good Things To Know),  Live Support,  About Us,  Contact Us