The Situation
A homeowner in Alpharetta closed on a $400,000 mortgage at 6.5% last year. Their required payment is $2,528/month. They asked me if paying extra would actually make a difference or if it just goes into the bank's pocket.

The Challenge
Most borrowers don't realize that every extra dollar you send on a mortgage payment goes directly to principal reduction. Not interest, not escrow, straight to knocking down what you owe. The banks don't advertise this because a 30-year loan paid off in 30 years generates $509,000 in interest. A 20-year payoff? Only $330,000. That's $179,000 they'd rather keep.

The Solution
On that $400,000 loan, adding just $200/month extra ($2,728 total payment instead of $2,528) cuts the payoff timeline from 30 years to 23 years and saves $103,000 in interest. Want to turn it into a 15-year mortgage? Add $700/month ($3,228 total) and you'll save $247,000 in interest while building equity twice as fast. Same house, same rate. You just told the bank they're not getting another decade of your money.

The Outcome
That Alpharetta homeowner started paying $2,728/month. They'll own their home outright seven years earlier and keep over $100,000 that would've gone to interest. No refinance needed, though the impact compounds even further if rates drop and you can take advantage of a properly structured refinance with that lower principal balance.

The Takeaway
Any extra payment on a 30-year mortgage is applied as principal reduction. No exceptions, no fine print. The banks won't tell you this because it interrupts their profit machine, but a good mortgage broker works as hard to get you out of debt as they do getting you into it.

Micah Johnson
Branch Manager | NonQM, First Time Homebuyer, Self Employed Specialist
Metro Atlanta • North Florida • Savannah/Hilton Head • Tennessee

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