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The chart below gives examples of three different loan terms and what paying between $75 to $100 more a month would do to the mortgage. It is based on a $100,000.00 loan at 7% interest.
| Years | Int Rate | Payment | Interest | Total of Payments | Savings |
| 30 | 7% | $665.30 | $139,508.00 | $239,508.00 | |
| Round Payment to $750.00 | $93,994.86 | $193,994.86 | $45,513.14 | ||
| This loan would be paid off in 259 months instead of 360. | |||||
| Years | Int Rate | Payment | Interest | Total of Payments | Savings |
| 20 | 7% | $775.30 | $86,072.00 | $186,072.00 | |
| Round Payment to $850.00 | $69,409.58 | $169,409.58 | $16,662.42 | ||
| This loan would be paid off in 199 months instead of 240. | |||||
| Years | Int Rate | Payment | Interest | Total of Payments | Savings |
| 15 | 7% | $898.93 | $61,789.40 | $161,789.40 | |
| Round Payment to $1000.00 | $50,517.67 | $150,517.65 | $11,271.73 | ||
| This loan would be paid off in 151 months instead of 180. | |||||
There are a couple of things that you need to check. First is that your loan agreement doesn't allow the loan company to charge penalties for early payment. Secondly, if you itemize your federal income taxes and deduct mortgage interest, paying less interest will mean a lower deduction. I believe it is safe to say that the interest savings will far outweigh the tax savings.
Even if you don't have $75 to $100 a month to add to your mortgage payment, even $25 would save a lot.
If you would like to have your own Loan Calculator, just visit www.pine-grove.com to download their Loan*Calculator! Plus. This is a free version and has everything the average family can use. It is also the Loan Calculator I have used for several months. Highly Recommended.
About The Author: Terry Rigg is the author of Living Within Your Means - The Easy Way http://www.homemoneyhelp.com/ebookadpage.html and editor of The FREE Budget Stretcher Newsletter and Budget Stretcher web site http://www.homemoneyhelp.com. He has 25 years of experience counseling individuals and families concerning their personal finances.
By
06/29/2006
also if you have a simple loan-no arm or 2nd mortgage, if the lender has no pre payment penalty clause you can send in 1/2 of your mortgage 2 weeks prior to the due date and the other 1/2 when it is due. This will cut 30 months off of a 15 year loan, because when they figure intrest, every month there is less balance to figure it on because of that 1/2 pymt. My Dad taught me this trick when I bought my 1st house way back in 1986-it works!!! The banks don't like it-but who cares.
By
03/01/2003
You are so right..I did just what you said each month 17 yrs ago & Did pay off my 30 yr mortgage in 25 yrs. It feels sooo good to have extra money each month. In fact I even have a savings account now where before I never had money for one.This way really works.
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