How Pre-Paying Your Mortgage Can Save You Money

PRE-PAYING YOUR MORTGAGE EVERY MORTGAGE PAYMENT INCLUDES: P. I Principal Interest Year I Year 10 $300.000 $300,000 4% interest original borrowed principal 4% interest The principal in a mortgage payment is equal to the original amount of money borrowed. The interest that is paid each month is a percentage of the principal owed. T I Тахes Insurance LESS THAN 20 BANK II PERCENT Homeowners must paytaxes ontheir property each month in their mortgage payments. If the homeowner put less than a 20 percent down payment on the home, they may have to pay mortgage insurance each month. SINCE TAXES, INSURANCE AND INTEREST ARE A MONTLY CHARGE, ANYTHING EXTRA YOU PAY EACH MONTH GOES TO PRINCIPAL. 30-year, $300,000 loan at 4% Compare the interest paid when a borrower pays the exact payment for 30 years, versus pre-paying $I00 each month: $250.000 $200.000 $150.000 $100,000 $50.000 Paying exact mortgage Paying $I00 more a month on mortgage payment payment each month Not only will you save $28,746.59. you'll pay the mortgage off 3 years early!