Discover how extra payments can save you thousands in interest.
Base monthly payment: $2,076
Time Saved
6 yrs 8 mo
New payoff: 23 yrs 4 mo (vs. 30 years standard)
Interest Saved
$112,078
Standard Total Interest
$427,185
New Total Interest
$315,107
Extra Monthly Cost
$200
Avg. extra per month
On a $320,000 loan at 6.75% for 30 years, paying an extra $200/month saves approximately $112,000 in interest and cuts 6–7 years off the loan. The savings are front-loaded — extra payments early in the loan save the most.
This depends on your mortgage rate vs. expected investment returns. If your mortgage rate is 7% and you expect 8–10% stock market returns, investing may be better. But paying down your mortgage is a guaranteed, risk-free return.
Apply extra payments directly to principal. Options include: adding to your monthly payment, making bi-weekly payments (results in one extra payment per year), or making a lump-sum payment annually.
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