The Power of Extra Mortgage Payments
Your standard monthly mortgage payment is split between interest and principal. Early in the loan term, most of it goes to interest. Making extra principal payments directly attacks your balance and triggers compounding savings.
A Real Example
On a $320,000 30-year loan at 6.5% APR:
- Base monthly payment: $2,023
- Total interest over 30 years: $408,280
Add just $200/month extra:
- Payoff time reduced to ~24 years
- Total interest: ~$337,000
- You save ~$71,000 in interest
When Does It Make Sense?
Making extra payments is ideal if:
- Your mortgage rate is higher than what you'd earn in a savings account
- You want guaranteed, risk-free "returns" (interest you don't pay)
- You're on a fixed income and want to free up monthly cash faster
Action Plan: Model Your Savings
Use our US Mortgage Amortization Calculator to simulate your exact payoff timeline and interest savings with any extra monthly amount.
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