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Save On Interest
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- Save On Interest
How to Save Thousands in Interest and Reduce Your Mortgage Timeline
There are several straightforward methods to make extra principal payments that can significantly cut down your interest expenses and help you achieve mortgage freedom sooner than expected. Here are some effective strategies to consider:
Round Up Your Monthly Payments
- A simple yet impactful approach is to round your monthly mortgage payment up. For instance, if your payment is $734, consider paying $800 instead. This small adjustment can save you over $48,000 in interest and reduce your mortgage term by approximately 7.5 years!
Utilize Your Tax Refund for Pre-Payments
- A practical way to make extra payments is by applying your income tax refund to your mortgage. For example, with a $100,000 mortgage, applying a $1,000 tax refund can save you over $8,600 in interest and shorten your mortgage term by 13 months. This straightforward strategy can lead to substantial savings over time.
Opt for a 15-Year Mortgage
- If your budget allows, consider choosing a 15-year mortgage instead of a 30-year option. The increase in monthly payments is relatively modest, but the interest savings are remarkable. For a $100,000 mortgage at an 8% interest rate, the monthly payment might be about $200 more, yet you could save an astounding $92,083 in interest over the life of the loan.
# Implementing these strategies is a smart way to minimize your interest payments and accelerate your path to mortgage payoff.