How often should you put extra payments on your mortgage to pay it off early?
QUESTION: Jack has refinanced his mortgage from a 30-year to a 15-year fixed mortgage. He wants to know how he should pay more on the principal to pay off the mortgage sooner – a little bit every month or a big chunk at the end of the year.
ANSWER: The interest rate is calculated like a simple interest loan, so paying off your mortgage with a little bit each month instead of in one lump sum at the end of the year will pay it off more quickly.
Make sure when you make these extra payments that you tell them to put it toward the principal payments. You don’t want someone entering this incorrectly.
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