Save thousands on mortgage interest
You can save thousands of dollars in mortgage interest and shave years off your payment period with one simple financial move: pay extra principal each month.
Did you know that there’s a way to reduce your overall mortgage expense and pay off your loan early? It’s simple to do, and you don’t need to pay extra fees to do so: just add more to your principal payment each month.
Let’s take a look at how an extra $100 each month saves big money for two homeowners:
Jessica—30-year fixed rate loan
Jessica has 22 years left on her 30-year mortgage with a 4.50% interest rate and a balance of $150,000. By applying an extra $100 to principal each month, Jessica can save a whopping $15,089.90 and shave three years and five months off her repayment period!
Michael—15-year fixed rate loan
Michael also has a balance of $150,000, but he has 12 years to go on a 15-year mortgage with a fixed rate of 3.75%. An additional $100 toward Michael’s principal each month will save him $3,368.40, and he’ll pay the loan off one year early!
Calculate how much you could save
It’s easy to see how much you could save on mortgage interest with our prepayment calculator. You’ll need this information to get started:
- present mortgage balance
- interest rate
- remaining loan term
- loan type (fixed or adjustable rate)
When you pay extra, make sure it’s applied to principal
If you decide prepaying mortgage principal is right for you, make sure the extra payment is applied to the principal rather than future payments. With Consumers Online Banking, look for the pull-down box that says, “pay to principal.” If you need help, give us a call at 800.991.2121 or check out this how-to guide on how to make biweekly payments to pay off your mortgage faster.
Change your mind anytime
Sometimes life throws surprises your way—like an unexpected bonus or repair bill. Both influence your budget. If you have extra money available one month, you can increase your additional principal payment. If you have a tight month, you can reduce or eliminate the extra payment. It’s always up to you.
One last note
At Consumers, there is never a penalty for paying mortgage loans off early. If your mortgage is with another lender, check to see if they penalize early payments and calculate how this will affect your savings.
Consumers helps more than 1,000 members finance land, homes and home improvement projects each year. When you need a mortgage or home equity line of credit, call us at 800-991-2221. We’re here to help you get the home of your dreams!