You have an emergency fund, you’re saving for retirement, you and your family are properly insured, you don’t have high-interest debts, and your income is stable. When you SHOULD make extra mortgage payments Is it worth making extra mortgage payments? Your interest rate, on the other hand, doesn’t include additional costs, like loan origination fees or mortgage points. It includes your interest rate, loan fees, and any other annual costs. What’s the difference between interest rates and APR?Īn annual percentage rate (APR) is a much broader measure of what you pay to borrow money. As you pay down your initial loan, your interest charges gradually decrease.įor instance, if you have an interest rate of 5% on a home loan of $300,000, you would pay $15,000 in interest charges for the first year (or $1,250 per month). □ Interest rate: what you pay to borrow money to purchase your home, calculated as a percentage of your loan balance. When you put extra money toward your initial loan balance (the principal), you can pay your loan faster and save on interest. □ Extra payments: what you pay in addition to your regular monthly mortgage payments. For example, if you’ve been paying a 30-year mortgage for 5 years, then you have 25 years left. □ Years remaining: the time that’s left on your mortgage. For example, a 30-year mortgage would have a loan term of 30 years. □ Term of the loan: the amount of time you’ve agreed to pay off your mortgage. When you make extra mortgage payments, you’re reducing this initial loan.
□ Initial loan amount: how much you originally borrowed to purchase your home. Save thousands if you decide to sell! 100% free with no obligation. □ Thinking about selling? Use Clever to find a top local agent, get a pro valuation and advice.