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Extra Payment a Year on 15 yr loan


ba0501
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I know if you pay the equivalent of one extra mortgage payment per year it can cut off anywhere from 7-9 yrs and lots of interest $ on a 30 yr loan. What I want to know if this will work on a 15 yr loan also. If so, wouldn't that mean that you could own your own home outright in say 8 or 9 yrs? Anyone know?

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The "extra payment" effect on a 15yr is sizable but not as drastic as the 30yr mortgage. This is due to the extra payment on the 30yr reducing the principal and interest on the principal over 30 YEARS. The compounding savings is HUGE. Not quite that much savings when you save yourself the compounding over 15 years. Still nice to reduce your debtload though.

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