Add A Few Dollars To Your Mortgage Payment

Many of us don’t believe that a few dollars can make a big difference. In a lot of cases that is true. But when it comes to mortgages or any other type of loan, a few extra dollars can save you Big Bucks.

The chart below gives examples of three different loan terms and what paying between $75 to $100 more a month would do to the mortgage. It is based on a $100,000.00 loan at 7% interest.

By adding $84.70 to your 30 year loan you can save $45,513.14 and pay the loan off in 21 1/2 years.

By adding $74.70 to your 20 year loan you can save $16,662.42 and pay the loan off in 16 1/2 years.

By adding $101.07 to your 15 year loan you can save $11,271.73 and pay the loan off in 12 1/2 years.

You can also see that obtaining a shorter loan term when you buy your house can save a lot of money.

There are a couple of things that you need to check. First is that your loan agreement doesn’t allow the loan company to charge penalties for early payment. Secondly, if you itemize your federal income taxes and deduct mortgage interest, paying less interest will mean a lower deduction. I believe it is safe to say that the interest savings will far outweigh the tax savings.

Even if you don’t have $75 to $100 a month to add to your mortgage payment, even $25 would save a lot.

Article by Terry Rigg of Budget Stretcher.