$3 saved per $1 prepaid
When extra payments may have the highest impact?
When you make an extra mortgage payment matters as much as how much you pay. A $5,000 extra payment in year 1 saves about $15,400 in interest over the life of the loan, while the same $5,000 paid at month 300 saves only about $1,200. Early payments hit a larger principal balance, so they compound through more remaining months.
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Try calculatorKey takeaways
04 · ideas- Month 1 extra payment saves 3x more than the same payment at month 200
- A $5,000 payment in year 1 saves ~$15,400 in interest
- The same $5,000 at month 300 saves only ~$1,200
- Refinancing before extra payments can multiply their impact
Illustrative chart
$200k · 7.5% · 30yr
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Extra payments are most powerful when made early in the loan. Here's why: your mortgage balance is largest at the beginning, so every dollar you apply to principal in year 1 eliminates that dollar from a very long compound interest chain.
Think of it this way: $1,000 off your balance in month 1 means you avoid paying interest on that $1,000 for the next 29 years. $1,000 off in year 28 means you avoid interest for only 2 remaining years.
Simple rule: If you have money to put toward your mortgage, sooner is often better than later.
That said, "sooner" doesn't mean it may not be advisable to skip your emergency fund or pass up employer 401(k) match. Those priorities come first.