Frequently asked questions
How much can an extra $200/month really save?
On a $300,000 mortgage at 6.5% with 25 years remaining, an extra $200/month saves approximately $75,000 in interest and cuts about 5 years off the loan. The savings compound because each extra dollar reduces the principal that future interest is calculated on.
How do biweekly payments save money?
With biweekly payments, you pay half your monthly payment every two weeks. Since there are 52 weeks in a year, you make 26 half-payments (13 full payments) instead of 12. That one extra payment per year goes entirely to principal, which can shave 4 to 6 years off a 30-year mortgage and save tens of thousands in interest.
Should I make extra payments or invest the money instead?
Compare your mortgage rate to your expected after-tax investment return. If your mortgage is at 6.5% and you expect 8 to 10% from investments, investing may win mathematically. But paying off the mortgage is a guaranteed risk-free return equal to your interest rate. Many people do both: make modest extra payments for certainty while investing the rest.
Does my lender allow extra payments without a penalty?
Most modern mortgages allow extra payments without penalty, but some have prepayment penalties in the first 3 to 5 years. Check your loan agreement. FHA loans, VA loans, and loans from federally chartered credit unions prohibit prepayment penalties by law.
What is the difference between the two modes?
Use 'Know original loan' if you have the original loan amount and term (good for newer loans). The calculator derives your current balance from payments already made. Use 'Know current balance' if you just know what you owe now and your monthly payment (check your mortgage statement). Both produce the same payoff analysis.
Is it better to make one lump sum or spread it monthly?
Monthly extra payments are slightly more effective because they reduce principal sooner, meaning less interest accrues each month. A year-end lump sum leaves the balance higher for 11 months. If you have a windfall, apply it immediately rather than waiting for a round date.