Considering extra mortgage payments?

Our house has a fixed mortgage, and one of the reasons I went with that instead of an ARM was the greater flexibility in paying it off early. There are a bunch of options I’m kicking around currently, including…

  • Sock some money away monthly in a savings account, CD or money market fund, let it accrue interest, and make a mad lump sum payment in 5 or 10 years
  • Pay a small extra amount towards principal on each monthly payment
  • Pay a larger lump sum amount towards principal at the beginning or end of each year
  • Pay both the small monthly amount and the larger annual lump sum towards principal

To help me along, there’s a handy calculator to plug in different number scenarios: Advantages of extra mortgage payments.

"Are extra mortgage payments advantageous? This financial calculator helps you find out how much interest you can save by increasing your mortgage payment. View the report to see a complete amortization payment schedule, and how much you can save over the life of your mortgage"

3 thoughts on “Considering extra mortgage payments?”

  1. Update. Jodie and I talked this over, and we went over finances and such, and the plan is…
    – pay an extra amount monthly towards principal
    – segment out some additional money per month in a savings account. This money can be put into a lump-sum principal payment at the end of the year, deposited into an account such as an IRA, or just kept back for emergency fund purposes

    Reply
  2. a cheep trick: i make my house payment every two weeks instead of once a month. saves much intrest over the long run. we also split our insurance and taxes by 12 and pay this once a month, all set up to be payed with our house payment automaticly. just remember to keep this bank account full.

    Reply

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: