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The value of extra mortgage payments

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    The value of extra mortgage payments

    Or any loan, really.

    Our mortgage company (Quicken) just redesigned their website. One new thing that it shows without having to go searching for it is how much extra principal you have paid and how much interest you have saved as a result.

    We have paid $18,976.73 extra, saving $11,440.05 in interest and saving 46 payments.

    That's pretty darn good considering we have not made any serious effort to prepay the mortgage, focusing on other priorities instead. I have always rounded up the payment to the next hundred dollars though. Years ago, we did make bigger extra payments but we haven't for quite some time.

    * Despite the high cost of living, it remains very popular.
    * Why should I pay for my daughter's education when she already knows everything?
    * There are no shortcuts to anywhere worth going.

    It makes HUGE difference! I helped out a woman in a facebook group who had a 10% mortgage. I don't know the details why, but she won't or can't refinance it. I did the math for her with my handy dandy mortgage spreadsheet and found that if she increased her payment by $227.3 (bringing the payment from $1,592.70 to $1,820.00), she would turn it into a 15 year loan and save $141,800.90, over half the interest!!! Holy cow!

    Even with a lower interest rate like my 4.625% $108K mortgage, by paying $200 extra would save us 12.5 years and 46% of the interest (we will actually save 79% of the interest because we did some bulk payments and double our monthly payment).

    If you want the spreadsheet, have at it:
    Personal Finance Blogger, Mechanical Engineer, and Mother of 3 Toddlers