Does paying extra on your monthly mortgage payment save you money?

Paying extra on your monthly mortgage payment is generally a strategy used to reduce the total interest paid over the life of the loan, which leads to significant savings. When you make extra payments towards your mortgage principal, you decrease the outstanding balance quicker, which in turn reduces the amount of interest you accrue over time since interest is calculated based on the remaining principal.

The idea that paying extra does not save money (as indicated by the choice selected) contradicts how mortgages typically work in terms of interest calculations. By lowering the principal, you not only pay off the loan faster but also reduce the overall interest paid, leading to savings.

When considering the potential effects of interest rates or payments in specific years, this does not negate the fundamental principle that paying extra does lead to savings. In fact, the total amount saved may vary depending on your loan's interest rate, remaining term, and other factors, but fundamentally, extra payments will save money by reducing interest costs.

In conclusion, paying extra on your mortgage payments is a financially sound practice that reduces the remaining balance and pertinent interest costs, making it a beneficial strategy for homeowners seeking to save money.