| I'm going to show you how to save the absolute | | | | SO, if they're going to front-load that interest, you've |
| maximum in interest and how to pay off your | | | | got to counter it and front load the principle payments. |
| mortgage faster than you ever imagined. | | | | This is what I'm saying, an extra payment of $100 to |
| First of all, if you want to save interest and pay of | | | | the principle in the first month will save you more |
| your mortgage early but haven't realized by now that | | | | money and pay off a mortgage far faster than a $100 |
| your mortgage payments are going to waste on | | | | prepayment in any later month during your mortgage. |
| interest then you're in for some studying. The interest | | | | This happens because of something called the |
| you pay is mostly paid at the beginning so that hardly | | | | prepayment snowball effect. That $100 prepayment |
| any of your money ever goes towards principle. It | | | | lowers the balance. This means that the 6% that is |
| takes a LONG time. | | | | taken out of your mortgage payment as interest is |
| You see, if the interest rate is 6%, it means that 6% of | | | | less. That means more money goes to principle on the |
| the principle balance is taken out of every single | | | | next payment, which means more on the next, and |
| mortgage payment and put into the bank's pocket. | | | | increasing more on each payment. The earlier you |
| This makes it nearly impossible to pay off a mortgage | | | | make that $100 prepayment in your mortgage |
| without being absolutely destroyed by the interest | | | | amortization schedule, the more it with snowball, save |
| charges. | | | | you interest and accelerate the mortgage pay off. |