Listen, every little bit helps and can knock years off your loan-especially if you’re a new homeowner. As you make extra payments month after month, you’ll start to see your loan balance drop lower and lower. With curtailment, slow and steady wins the race. See how much house you can afford with our free mortgage calculator! Making a payment to interest or escrow won’t shorten the length of your loan. When you make an extra payment, your mortgage company should give you the option of applying it to your loan’s principal, interest, escrow or the following month’s payment. Some only accept extra payments at certain times or might even charge prepayment penalties (boo!). But make sure to check with your mortgage company before you start making extra payments. Making a curtailment payment is as simple as submitting a payment online or cutting a check to your mortgage company. The grass feels different under your feet when your home is paid off. On top of that, paying off your home early saves you thousands of dollars in interest over the life of your loan.Ĭan you imagine what life would be like if you didn’t have a monthly mortgage payment? It’d be pretty sweet, right? You’d have extra cash in your budget and peace of mind knowing your home is 100% yours. The huge benefit of curtailment is that you can cut years off your mortgage. Going through life chained to a 30-year mortgage is no fun. After you’ve paid off all your debt except your house, saved 3–6 months of expenses for a fully funded emergency fund, and started investing 15% of your income for retirement-then you can start making extra payments on your house. You might think that won’t make a dent in your debt, but $100 extra a month can knock about four years off your 30-year mortgage.Īnd if you find another $100 a month to put toward your mortgage, you could curtail the length by almost seven years.īut before you even consider making extra house payments, you need to make sure your financial house is in order. Even something as simple as brown-bagging it for lunch instead of eating at a restaurant can save you up to $100 a month that can go toward your mortgage. Seriously, extra money? Who has any of that?īut when it comes to paying off your mortgage sooner, every little bit counts. Curtailing your loan is totally up to you, and it takes planning and hard work to figure out how to put extra money toward your mortgage. You can’t call your mortgage company and ask them to sign you up for curtailment. And the quicker you can escape your mortgage, the better. Each time you put extra money toward the principal balance of your mortgage, you shave time and interest off your loan. When you make extra payments on your mortgage, you shorten (or curtail) the length of your loan. Mortgage principal curtailment is shortening the length of your loan by making extra mortgage payments.Ĭurtailment is simply a fancy word for shortening the length of something-in this case, your mortgage. Well, that’s what mortgage principal curtailment is all about. What if there was a way to get rid of your 30-year mortgage in 20 years? Or dump your 15-year mortgage in seven years? You’d probably say, “Sign me up!”
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