Do you have a summer job? Did you get a summer bonus? Decided not to go on vacation this summer? With any extra money you may have, consider making an additional payment or two on your mortgage. You may be surprised how much you could save by making an extra payment here and there. Whether it’s one extra payment a year or two, making any extra payments can help you pay off your loan early, start building equity faster, and reduce the amount of interest you will end up paying.
Making a single extra mortgage payment could shave months off of your loan and save you money in interest over the life of your loan. For example, let’s say you have a $300,000, 30-year mortgage at a 6.75% interest rate. If you make one extra payment of $1,946 in the first year, it would shave seven months off your 30-year term and reduce your total interest paid from $400,486 to $388,115, resulting in over $12,000 less interest.
What about if you make two extra payments a year? For a $300,000, 30-year mortgage at a 6.75% interest rate, making two extra payments a year – totaling $3,892 – would mean that you shave 1 year and two months off your 30-year loan. Your total interest paid would be reduced from $400,486 to $376,308.95 – that’s over $24,000 in interest saved!
If you’re interested in making two extra payments a year, you could consider making one payment this month – in July – and making the next extra payment in January. This way you have six months in between making the extra payments.
Are you interested in crunching some numbers for yourself? We have several different calculators you can use to help you understand your home budget and decide what’s best for you.
At Ruoff Mortgage, we understand that buying a home is one of life’s biggest moments – not just as a financial decision, but a personal one. For more than 41 years, we’ve proudly helped families turn their dreams into reality. From our roots in northeast Indiana to now serving homebuyers throughout the Midwest, our focus has stayed the same: delivering exceptional service rooted in care, speed, and community. With an average 15-day clear-to-close time, our team is here to make your journey to homeownership as smooth and stress-free as possible. When you're ready to take the next step, we’re here to walk with you, every step of the way.