From the video
The extra payment that ends 30 years first
You came from the video about which extra payment actually shortens a mortgage. Here is the workbook that runs it on your loan, plus the calculator, free.
Get the free workbook
The Debt Freedom Blueprint plus an Excel workbook. Put every debt in one place, see what the minimums are costing you each month, and find out which one to hit first.
They are also right here, so you do not have to wait:
The three numbers from the video
All of these come from the same loan: $380,000 at 6.5% over 30 years, a principal and interest payment of $2,401.86.
| What you do | Paid off | Interest saved |
|---|---|---|
| Nothing extra | 30 years | , |
| Add $100 a month from month one | 3 yr 3 mo early | , |
| Switch to biweekly payments | 5 yr 10 mo early | , |
| Add $343.53 from month one | 8 yr 7 mo early | $160,659 |
| Add $343.53 starting in year ten | 4 yr 5 mo early | $63,400 |
That last pair is the whole point. Same payment, same loan. Waiting ten years to start costs you $97,259.
Why waiting costs that much
In month one, $2,058.33 of your payment is interest and only $343.53 touches the balance. Your payment does not split evenly until month 233, nineteen and a half years in.
It takes 21 years and 5 months to pay off the first half of the loan, and only 8 years and 7 months to pay off the second half. In the last ten years each check buys about two and a half times as much house as it did in the first twenty.
An extra dollar early removes interest for the entire remaining life of the loan. The same dollar in year ten has far less time left to work.
Run it on your own loan
Mortgage Payoff Calculator Extra Payment Calculator All 10 calculators
Who should not do this
Paying a mortgage down early is not automatically the right move. If you carry credit card debt at 20%+, that is costing you more than the mortgage is. If you have no emergency fund, build that first, money paid into a mortgage is very hard to get back out. If your employer matches retirement contributions and you are not capturing the full match, take the match first.
The workbook above sorts that order out for you before you put a dollar anywhere.
The four questions this worksheet does not answer
Can you recast your loan, or is it FHA and cannot be recast at all? When can your PMI come off, and against which value? What will escrow do next year? Should retirement money go near the house at all? The Payoff Planner Pro answers all four on your own numbers.
See the Payoff Planner Pro →One payment of $97. Nothing renews. 30 days to change your mind.