Step 5 of 5 — Pay off faster
See how much time and interest you save by making extra principal payments on your mortgage.
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New payoff months = -log(1 - r×Balance/Total payment) / log(1+r). Interest saved = (base payment × original term) - (total payment × new term). Extra payments go 100% to principal.
On a $300K 30-year mortgage at 7%: $100/month extra saves ~$65K in interest and pays off 5 years early. Every extra dollar makes a difference.
Apply directly to principal. Call lender or specify "apply to principal" — avoid letting it apply to next month's payment. Even biweekly payments help.
If mortgage rate > expected investment return, pay down mortgage. If mortgage rate < expected return (and you're in a low rate), invest instead.
Paying half your monthly payment every 2 weeks = 26 half-payments = 13 full payments/year. The extra payment saves ~4-5 years on a 30-year mortgage.
Great if rate is above 5-6%. Less compelling at 3% (better to invest in market). Always consider opportunity cost of the extra payment.
Calculations are for educational purposes only. Consult a qualified financial advisor for personalized advice.