Question

Why would it be beneficial to pay a little more than the required mortgage payment?

Answer 1

Paying a little more than the required mortgage payment can help you build equity, save on interest, and pay off your debt sooner.

Step-by-step explanation:

Paying a little more than the required mortgage payment can be beneficial for several reasons:

1. Build Equity: By paying extra towards your mortgage, you can build equity in your home at a faster pace. Equity is the value of your home that you actually own, which can be helpful if you decide to sell the property in the future.
2. Save on Interest: Paying more each month reduces the principal balance faster, which means you'll pay less interest over the life of the loan. This can result in significant savings over time.
3. Pay off Debt Sooner: Making extra payments can help you pay off your mortgage faster, allowing you to be debt-free sooner and have more financial freedom.

Answer 2

Since your interest is calculated on your remaining loan balance, making additional principal payments every month will significantly reduce your interest payments over the life of the loan. By paying more principal each month, you incrementally lower the principal balance and interest charged on it.

Step-by-step explanation: