Question about Mortgage Prepayment on a Fixed 30 year Loan?
I am in the process of purchasing a home that is under construction and I have read some things about pre-paying your mortgage. According to my GFE my mortgate principal & interest is 835, hazard ins. escrow is 37, mortgage ins escrow is 61, taxes are 286 making my total payment appx. $ 1219.
Since I will be getting a larger tax return if I chose to make one extra payment a year exactly how much am I saving?
I have read one extra payment towards principal will knock off 6-7 years but that seems like a WHOLE LOT. I think I have to be missing something. Can that possibly be saying that if I make 1 extra payment every Feb (I will close next month) for the next 3 years that I will actually pay this loan off in appx 15 years? (3×5 years-low ball estimate=15 years off of my 30)
Can someone explain this in detail so that I can understand CLEARLY what making prepayments will really do to my balance. Thanks!
I would make the additional payment from my tax return every Feb.
Actually the mortgage amt is 149,050 @ 5.375@