Should I pay off my mortgage early? How much money will it save me? How much extra should I pay each month? If I pay an extra one hundred dollars each month, when will my mortgage be paid off? As you can imagine, we get these questions a lot. They are all excellent questions, but the answers vary depending on the homeowner. Here, we’ll address some things to consider before paying off your mortgage early.
Debt-free living sounds like a dream, but even if it is financially feasible, is it the best choice for you? Paying off your mortgage early will save you the interest expense you would have incurred over time; and the higher your interest rate, the more you stand to save. If your interest rate is low, however, sending any excess cash to your mortgage servicer may not be your best option.
So, what else could you do with that extra cash? Speak to your financial advisor about your goals for retirement. When discussing investment options, you may be surprised to hear that the expected return on some portfolios may be greater than the savings you’d see by paying your mortgage off early.
How long do you plan to stay in your home? If you’re still in your first home, and you don’t anticipate ever paying off the mortgage, it doesn’t make much sense to overpay. Conversely, if you’re in your ‘forever home’ adding a little extra to your monthly payment could mean significant savings down the road.
When it comes to debt, mortgage debt is the best kind of debt to have, but let’s be honest—it’s still debt. If it’s going to help you sleep at night, and you can afford to payoff your mortgage, then by all means, do it! Have a mortgage burning party! Apparently that’s a thing.
So you’ve weighed your options and decided to pay down your mortgage—great! Use our amortization schedule calculator to determine how much sooner you will pay off your loan by paying extra monthly. Enter your total loan amount, interest rate, loan term, and open the advanced calculations to add your extra principal payments (monthly). After you click calculate, scroll down to see the number of months it will take to pay off your mortgage.
Let’s say, for example, you have a 30-year mortgage of $160,000 at a 4.25% interest rate. If you pay an extra $100 each month, you will pay off your loan in approximately 289 months, or 24 years.
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To apply for a Mortgage or Refinance call Riverbank Finance today at 1-800-555-2098.