Should I make a higher monthly payment?
If you plan on staying in your home until you retire, then paying more than your regular monthly mortgage payment might make sense. You’ll pay off your mortgage earlier and you’ll end up saving on interest. If you plan to move in the next few years, that extra monthly payment won’t save you much interest and that cash might be better invested elsewhere.
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The amount of your extra mortgage payment is based largely on what you can afford, but you generally wouldn’t want to spend more than 25% of your monthly income on your home loan. Spending a larger percentage can land you in financial trouble.
With smart planning and budgeting, BBVA Compass can help you make the best choice about early mortgage payoff.
Enter your current mortgage loan details, including purchase price, down payment, term, and interest rate. This will help us determine how much you may save with or without extra payments.
Determine the amount of your extra monthly payment, as well as how soon you plan to start. You can also quickly compare how different amounts and timelines will affect your monthly payment and total savings. Remember to keep home loan payments to 25% or less of your monthly income.
Select your average yearly property tax and homeowner’s insurance. Making extra mortgage payments should not cause a change in your current property tax or homeowner’s insurance.
Ready to buy your first home? Great! But to make it go as smoothly as possible, you'll want to be fully prepared.
If you've come into a windfall, or otherwise find extra money on hand, you may be tempted to pay off your mortgage before it's due.