USDA Loan PlusCalculate Your Savings With Our Amortization Calculator
How soon can you pay off your mortgage with $50 extra each month?
When
you're making a big purchase, it's important to think about how
you're going to pay for it. One option is to make extra payments on
your mortgage. This can save you money in the long run.
Use our amortization calculator to see how much you can save with
extra payments. For example, if you have a $200,000 mortgage and
make an extra payment of $100 per month, you'll save over $30,000 in
interest and pay off your loan nine years early. Making extra
payments is a great way to get ahead on your mortgage. Not only will
you save money in the long run, but you'll also reduce the amount of
interest you pay each month.
Pay Off Your Mortgage in Half the Time
Your mortgage consists of two parts: the principal and the
interest. The principal is the amount of money you borrow, while the
interest is the fee charged for borrowing that money.
The amortization schedule shows how much of your monthly payment
goes towards the principal and how much goes towards the interest.
You can save money on your mortgage by making extra payments. These
extra payments will go towards the principal, reducing the amount of
interest you pay over the life of the loan.
Even a small over payment each month will drastically reduce the amount of principal owed.
Q. Are there any expenses associated with paying off a mortgage?
A. A prepayment penalty is a charge by some lenders when you pay off
your mortgage loan completely or in part ahead of time. If you're
required to pay a prepayment penalty, you agreed to it when you
purchased or previously refinanced your home. Penalties for early
repayment might not apply to all mortgages.
Most mortgages that are subject to a prepayment penalty usually
apply only if you pay off your mortgage in full within a specific
number of years, usually three or five years.
In some cases, if you pay off a sizable amount of your mortgage at
once, you might be liable for a prepayment penalty. Prepayment
penalties are often eliminated if you make extra principal payments
on your mortgage in small amounts-but it's always a good idea to
check with your lender.
SOURCE:
Consumer Financial Protection Bureau
Q. Are you able to make additional payments on your
mortgage principle?
A. The majority of mortgage providers enable you to make additional
principal payments if you so want. For instance, you may pay an
extra $50 or $100 each month or make one more mortgage payment every
year. The benefit of this strategy is that it reduces the overall
amount of interest paid during the loan's life.
Q. Is it possible for me to make a significant payment on my
mortgage?
A. The lender/servicer will always take an extra payment in order to
mitigate the risk of default.
Q. If I refinance, do I get a reimbursement of
my escrow funds?
A. Yes
Q. How can I reduce the amount of my escrow payment?
A. While you will be unable to reduce the principal and interest
component of your mortgage payment, if your property taxes are
escrowed, you may seek to appeal the real estate taxes. Look for a
less expensive homeowner's insurance policy. Is your mortgage
insured?
Q. Is it true that paying down the principal
lowers the amount of interest charged?
A. Paying extra money to your mortgage balance does not result in a
reduction in your monthly payment. However, the extra principal
payment will lower the total interest paid during the loan term.
Conclusion
An amortization calculator with extra payments can help you determine how much money you can save on your mortgage by adding extra payments to your loan. By making extra payments, you can pay off your mortgage sooner and reduce the amount of interest you pay on your loan.