How best to reduce the amount of interest charged through the life of a loan?
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How best to reduce the amount of interest charged through the life of a loan?
Question: I have a 30 year fixed mortgage and I’m trying to…
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Question:
I have a 30 year fixed mortgage and I’m trying to reduce the amount of interest I pay throughout the life of the loan. So my question is, should I prepay an extra payment now or should I wait a few years to prepay?
Answer:
You’re trying to reduce your overall interests. It would be best to start prepaying as soon as you can. The way amortization works is interest is front loaded in the early months. So the sooner you can start knocking out that principal, the better.
Another thing you can do is do biweekly payments. So if you took your mortgage payment and paid half of it every two weeks, you would end up making 13 payments a year instead of 12 and that should knock a few years off your loan as well.
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