Refinancing a Home
Saving Without Refinancing
Refinancing your mortgage can save you money, but paying one extra mortgage payment every year can, too. By applying the extra payment to principal, the balance of your mortgage drops and future interest is calculated on the lower amount every month for the remainder of your loan.
Say you have a 30-year, 6%, fixed rate mortgage of $200,000. Your payment is approximately $1,200 a month. If you make one extra payment every year, you could save more than $47,000 a year in interest payments and reduce the term of your mortgage by five years.
If you can't come up with an extra payment all at once, remember you can also make additional principal payments of whatever amount you can afford whenever you like.