Most people understand how and why owning a home is generally a better financial move than renting from a landlord. Owning and renting both come with pros and cons. Being a homeowner has many advantages, however, making additional payments on a promissory note is frequently overlooked as one of those advantages. If your lender allows it, making additional payments, when possible, reduces overall interest over the life of the loan (usually by a significant amount). My wife and I purchased a property last summer (2022). I’ve included a picture of the amortization schedule I created for this particular property in order to track payments, interest, outstanding balances, etc. This schedule gives me an opportunity to make assumptions based on different scenarios.
Obviously, there are many variable that will be different for every home purchase. You can find my particular variables in the snippet. With these variables in mind, if we make a $50 additional payment each month for the life of the loan, we’ll save $25,365 in interest and the loan will be paid off almost two years faster. $50 per month is not much money to scrounge up and it’s a great opportunity to make (guaranteed) returns on investment without having to pay a professional. Please feel free to email me and I’m happy to send a copy of my Excel file that has my amortization schedule.
MoneyManeuvering 