Paying down a thirty-year loan can seem a bit daunting. It is really the interest that we all want to reduce as much as possible. Have you ever wondered how much of a dent you can make by paying a little more every month? Let’s take a look.
By paying an additional $25 every month [for every $100,000 over 30 years at a 4.0% interest rate], you will save approximately $7,500. The higher the rate, the more you will save.
Example: If your mortgage is $500,000, you could pay an additional $125 each month ($25 x 5) and save approximately $37,000 over the life of the loan. Not bad. That could be a year of college, a new car, a full remodel for the kitchen or additional money going toward retirement.
You will shorten your term as well by accelerating payments. With these current very low rates, it only shaves off a few years. But you’ll be building equity as you save on interest all while shortening the length of your loan. Nothing wrong with that picture!
There are many ways to view how to make the most of the mortgage that you have currently or are planning to obtain. Feel free to contact Amy if you want to have a discussion and run some scenarios of what’s best for you.