Shorter term or lower payment?
Extra principal payments usually shorten the term, which saves the most interest. Some lenders also offer a recast, which lowers the monthly payment instead.
Example
A $250,000 balance at 6.5% with 300 months left: a one-time $10,000 payment cuts 27 payments and saves about $36,982 in interest.
Frequently asked questions
Is there a prepayment penalty?
Most US mortgages today have none, but check your loan documents.
See also
Results are estimates for information only and are not financial, legal or medical advice. Rates, taxes and fees vary — confirm with a professional or your lender.