Are you tired of the burden of your mortgage and want to pay it off quicker? Consider making an extra $100 payment towards your mortgage each month. This simple action can have a huge impact on your financial future. Let’s dive into why paying extra on your mortgage is a smart move.
The Power of Compound Interest
Making extra payments towards your mortgage allows you to take advantage of the power of compound interest. By reducing the principal amount, you’ll be paying less interest over time, which saves you a significant amount of money. This reduction in interest will also shorten the overall length of your mortgage.
Dropping Private Mortgage Insurance (PMI)
Do you have private mortgage insurance? If so, paying an extra $100 each month can help you get rid of it sooner. PMI is typically required if you put less than 20% down on your home. However, once you’ve paid down your mortgage to 80% of the home’s value, you can request that PMI be removed. By making extra payments and reducing the principal amount, you’ll reach that threshold faster, saving you money on monthly insurance premiums.
Paying Off Your Mortgage Early
One of the obvious benefits of making extra mortgage payments is the ability to pay off your mortgage early. By consistently making an extra $100 payment each month, you’ll significantly reduce the length of your loan. This means you’ll own your home outright much sooner than the original loan term, which can free up funds for other financial goals or retirement savings.
Financial Flexibility
Imagine the financial freedom of having your mortgage paid off early. Making extra payments gives you the flexibility to redirect those mortgage payments towards other financial goals or investments. Whether you want to save for your children’s education, go on a dream vacation, or start a business, paying off your mortgage early can provide you with the financial flexibility to pursue those goals.
Tips for Making Extra Payments
Making extra payments towards your mortgage is a smart financial move, but there are a few things to keep in mind. First, check with your mortgage lender to ensure there are no prepayment penalties. Some lenders may charge a fee for paying off your mortgage early, so it’s essential to understand the terms of your loan.
- Communicate with your lender: Let your lender know that the extra amount should be applied towards the principal balance of the loan and not towards future payments. This ensures that your additional payment is reducing the overall interest paid and shortening the loan term.
- Automate your payments: Set up automatic payments to ensure that you don’t forget to make the extra payment each month. By automating the process, you’ll maintain consistency and stay on track with your goal of paying off your mortgage faster.
- Manage your budget: Assess your monthly expenses and determine if you can find an extra $100 to put towards your mortgage each month. Cut down on discretionary expenses or find creative ways to increase your income to support your goal of paying off your mortgage early.
Frequently Asked Questions On Extra 100 Per Month Mortgage : Uncover The Power Of Small Savings
Can I Lower My Monthly Mortgage Payment?
Absolutely! By making extra payments, refinancing, or negotiating with your lender, you can reduce monthly payments.
Is It Worth Making An Extra $100 Per Month Payment?
Yes, it can save significant interest over time and help pay off the mortgage sooner.
How Will Making Extra Payments Affect My Mortgage?
It will reduce the principal faster, lower interest costs, and shorten the loan term.
Is It Advisable To Make Extra Payments Every Month?
Certainly, consistent extra payments can accelerate paying off your mortgage and save money in interest.
Conclusion
Paying an extra $100 per month towards your mortgage is a smart financial move that can have a substantial impact on your financial future. By taking advantage of compound interest, dropping private mortgage insurance, paying off your mortgage early, and gaining financial flexibility, you’ll be setting yourself up for success. Follow these tips and watch as your mortgage balance decreases, allowing you to own your home outright sooner than you ever imagined.
Ismail Hossain is the founder of Law Advised. He is an Divorce, Separation, marriage lawyer. Follow him.
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