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Paying an extra house payment here and there can save you money depending on when you pay it and how many extra payments you make. Depending on your situation, the interest you save can be worth striving to add to your monthly payment.
Benefits
Depending on your debt situation, paying extra house payments can set you on a path to being debt free. Another benefit is owning your home for less by cutting out some of the upfront interest you pay on your mortgage.
The Math
Depending on your loan amount, one extra payment can knock seven years off a 30-year mortgage, according to a banker with Wells Fargo. According to MSN Money, if you add $100 per month to a payment on a $250,000 mortgage with 6 percent interest, you can save up to $52,000 in interest alone over the life of the loan.
Payment Plans
To pay one extra payment a month, you can set your mortgage up on a biweekly plan versus a monthly plan to allow you to budget for the payment. Another option is to simply specify an additional amount to be paid toward the principal.
Considerations
Before making additional payments, consider the loan interest rate and if that money would be better utilized elsewhere. Credit card debt with high interest rates or savings programs, such as a 401k, may yield a better return versus paying down a mortgage.
Warning
Make sure you are paying the additional house payment toward the principal, rather that paying the full payment to the bank. They may put the money toward the escrow balance or your upfront interest. Be sure to specify where you want the payment to be directed.
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