So you’ve just bought a new Knoxville, Tennessee home, closed on the transaction and moved in; now you come face to face with something new in your life, your home mortgage.

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Some simple tricks and a little self discipline can help you pay your mortgage off many years early and save thousands of dollars in interest charges. 

Below is an amortization schedule for a typical $200,000, fixed rate, 6%, 30 year mortgage.

The monthly principal and interest payment is $1,199.10

Pmt Principal Interest Cum Prin Cum Int Prin Bal
1 199.10  1000.00  199.10  1000.00  199800.90
2 200.10  999.00  399.20  1999.00  199600.80
3 201.10  998.00  600.30  2997.00  199399.70
4 202.10  997.00  802.40  3994.00  199197.60
5 203.11  995.99  1005.51  4989.99  198994.49
6 204.13  994.97  1209.64  5984.96  198790.36
7 205.15  993.95  1414.79  6978.91  198585.21
8 206.17  992.93  1620.96  7971.84  198379.04
9 207.20  991.90  1828.16  8963.74  198171.84
10 208.24  990.86  2036.40  9954.60  197963.60
11 209.28  989.82  2245.68  10944.42  197754.32
12 210.33  988.77  2456.01  11933.19  197543.99

Here’s a good website to calculate your own amortization schedule; there are lots of them free all over the Internet. 

If you keep this mortage for the whole 30 years you will end up repaying $431,676 with interest charges. Of course you’ll likely pay it off and move; most Americans do every 7 years on average.

However it’s also very simple to save thousands of dollars in interest charges by simple pre-paying a little each month or a larger lump sum payment quarterly or years like if you get a large tax refund.

In the above schedule you’ll notice the principal amount gets just a little larger each month while the interest portion become a bit smaller. The reason is that your monthly payment is calculated each month on the remaining principal balance of your mortgage.

If you can discipline yourself to prepay a modest amount each month you will be surprised how much and how easily you can save.

If you just prepay $100 extra dollars towards the principal each month you will knock 5 years or 60 payments off your note; a savings of $71,946.00 in interest charges!

Another easy way to cut your mortgage term in half is to simply get an amortization schedule and prepay the next months principal payment each time you make your regular monthly payment.

In the example above the first and each succeeding month’s payment is $1,199.10. You’ll also notice the second month’s principal payment is $200.10.

If you afford an extra 200 bucks that will accelerate your mortgage by reducing the principal balance your loan is calcuated on and you’ll pay it off in roughly half the 30 years.

Here’s why prepaying works.

Whenever you pay anything towards the principal the interest paid each month goes down because each month’s principal & interest payments are calculated on the unpaid principal balance. Paying off the principal faster shortens the term of your loan and gets your mortgage paid faster.

Your payment will always be the same but you will make far less of them if you prepay any amounts towards your principal loan balance.

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If you would like to learn the many ways to pay your mortgage note off much faster and save months of payments and thousands in interest you could probably do other things with, just give me a call and we can calculate a custom schedule just for you.

BEWARE of any mortgage repayment scheme that require you paying an upfront fee or even refinancing with an adjustable rate loan and interest bearing checking account you deposit your paycheck into.

If you’re not absolutely sure about how any of these scheme work or what you’re getting into please call and ask before you cost yourself money!

Just in case you have’t found a Knoxville or Farragut area home to start making payments on…..;) www.KnoxvilleMLS.com is a good beginning to see all Knoxville’s great homes and condos for sale.