On a $200,000 mortgage at 6.5%, you'll pay over $250,000 in interest. Adding just $100 to your monthly payment saves $55,000 in interest and cuts 5 years off the loan. Check for prepayment penalties first.
Depending on your interest rate, that house you just bought may cost you more in interest payments than the entire purchase price of the home. Here is a way to save tens of thousands of dollars in interest payments. Let's say you take out a $200,000 loan at 6.5%. The mortgage payment on that home each month will be $1,264. For a 30-year loan, if you make the minimum payment every month for 30 years, you'll be paying over $250,000 in interest. On that house. If you added $100 to that mortgage payment every month, making it $1,364, you would save over $55,000 in interest payments over the life of that loan. Plus, you could finish paying it off in less than 25 years instead of 30 years. This may not be good for everybody's financial situation, and you need to check and see if there's prepayment penalties in your mortgage. But if you can save over $50,000, basically a little over $3 a day, it's worth taking a hard look
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