ShintoBlessing
Sat Sep 07 2024
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7 answers
1730
What happens if I pay an extra $100 a month on my mortgage principal?
Have you ever wondered what kind of impact an extra $100 payment per month towards your mortgage principal could have? Would it really make a difference in the long run? It's a common question among homeowners looking to pay off their mortgages faster and save on interest. In this scenario, let's delve into the potential benefits of such a decision. By consistently paying an additional $100 towards your mortgage principal each month, you're essentially reducing the outstanding balance on your loan faster. This, in turn, means that less interest accrues on the remaining balance over time. As a result, you could potentially save thousands of dollars in interest payments and shorten the length of your mortgage significantly. But how does this work in practice? When you make an extra principal payment, the bank applies that amount directly to the balance of your loan, reducing the total amount owed. The next month, interest is calculated based on the new, lower balance, which results in a smaller interest charge. Over time, this process repeats, accelerating the rate at which your loan is paid off. So, if you're looking to take control of your finances and pay off your mortgage sooner, consider making an extra $100 principal payment each month. It could be a smart move that pays off in the long run.
