Loans for dummies
Whether your goal is to lower your monthly payment or to save money on the total cost of your home mortgage, mortgages offer you several ways to achieve your goal. The first decision you have to make is, do you want to reduce your total payment or your monthly payment? These two numbers are opposed. Because interest compounds, making a lower total payment means making a higher monthly payment, and making a lower monthly payment increases the amount of money you will eventually pay to your lender. If you want a lower total payment, the solution is easy: Pay a little more each month. The extra money goes to pay off a little more of your principal, which slightly drops the amount of interest you pay next month, which means your next payment bites into your principal that much more deeply.