You may be amazed at the impact of making regular, additional principal contributions can have on your unpaid balance.
Each month, an increasing portion of the principal and interest payment goes to reduce the payment. However, when you make an additional principal contribution above the normal payment, it is applied entirely toward principal reduction.
You will save interest, reduce your unpaid balance and shorten the term of your fixed-rate mortgage.
If you are committed to doing this program, set an automatic bill payment through your checking account. Add the additional amount to the normal payment amount for a total that will cover the principal, interest, taxes and insurance plus the additional amount to be applied toward principal.
Verify with your lender each month that the additional amount was applied to principal instead of being added to the escrow account.
Use the Equity Accelerator to estimate the impact of making regular, additional principal contributions and what your payment would need to be to have it paid off in a certain number of years.