Say you get a 30-year loan at 3% (APR 3.039%) on $300,000.
Your payment (before taxes and insurance) would be $1,265. But what if you paid $30 more each month on the loan? That’s not much. Probably wouldn’t make a big difference, right? WRONG!
Well, instead of paying 155,332 in interest you’d pay only 148,918. That’s a savings of $ 6,414 in interest over the term. The real benefit is the 13 years you take off the mortgage! By paying just $30 more each month in my example, the loan is paid in full not on month 360 but on month 347.
Some can’t afford a 15-year term or even 20-year but don’t think that you can’t make an impact on your current mortgage. Most loans today have no prepayment penalty so you can pay the loan down or off without a penalty fee.