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See how extra monthly payments accelerate your mortgage payoff date and reduce total interest paid over the life of the loan.
Applied directly to principal each month
Extra Payment Impact:
Standard monthly payment is calculated from current balance and remaining term.
With extra payments: each dollar applied to principal eliminates future interest on that amount.
Interest saved = (Standard total interest) − (Total interest with extra payments). Payoff date found by month-by-month simulation.
On a $280,000 mortgage at 6.5% with 25 years remaining, paying $200 extra per month can save over $50,000 in interest and pay off the loan roughly 5 years early. The earlier in the loan you start, the greater the savings.
Compare your mortgage rate to expected investment returns. If your mortgage rate is 7% and you expect 10% stock returns, investing may yield more. However, paying down your mortgage is a guaranteed, risk-free return equal to your rate — which is hard to beat after tax.
Specify 'apply to principal only' when making extra payments. Without this, some servicers apply extra funds to future scheduled payments rather than reducing your balance. Most online portals have a dedicated principal payment option.
Making half your monthly payment every two weeks results in 26 half-payments — equivalent to 13 full payments per year instead of 12. This one extra payment per year can cut 4-6 years off a 30-year mortgage with minimal financial strain.
Most US mortgages originated after 2014 have no prepayment penalty under the Qualified Mortgage rules. However, some older loans and certain portfolio loans may include prepayment penalties for the first 3-5 years. Always check your loan documents.