Rental Property Investor · Newark, NJ · Member since 2023 · 57 posts · 23 votes
Hi, hope all is well to all. I currently have my house for 7 years and was caught up in life and really sat down and watched my payments vs how much is still owed. In reality I only paid about $40,000 and paid $220,000 in interest and I almost passed out. So I am asking for any advice on strategies on how to minimize this interest the banks are gaining to benefit me? Thanks
@Trevor Neale The extra $100-200 per month toward principal is one of the easiest strategies for reducing interest. In many cases, it can cut a 30 year mortgage down to 25 years.
You can use an amortization calculator to simulate extra monthly payments vs quarterly vs annual lump sum payments to the principal. They don't have large differences but there are some. You can start by seeing what your rate, principal and interest are monthly and original loan amount to make sure you replicate it correctly then go from them. I've used this one and though it's old the extra payment calculator is very simple.
The interest is front loaded so you are paying more interest in the beginning of the mortgage as far as the breakdown of interest versus principal in a standard 30 year fixed mortgage. Besides getting the lowest rate you can so you are paying the least amount in interest, making more frequent payments and larger payments whenever possible will help in reducing the principal. Making bigger and/or larger payments over time will have a compound effect of balance reduction over time.
@Trevor Neale The extra $100-200 per month toward principal is one of the easiest strategies for reducing interest. In many cases, it can cut a 30 year mortgage down to 25 years.