How to Cut Years Off of the Mortgage of your
Home, Sweet, Home

You’ve moved into your dream home. You’re enjoying the sense of achievement that comes from being approved for a loan, knowing your finances are sound. You’ve managed the stress of the buying process and experienced the elation of decorating your new home to make it your own. 

If you are like most homebuyers, chances are you have the standard 30-year mortgage and may feel daunted as you anticipate three decades of payments. 

What if there were a simple way to cut years off that mortgage and potentially save yourself thousands of dollars in interest? By making just one extra payment a year to your mortgage or by spreading that one payment over 12 months, you can do it. 

PNC Bank’s Staci Titsworth, a regional manager for mortgage based out of Pittsburgh, advocates putting a little extra money to work to cut the mortgage term and add equity faster. 

Titsworth suggests that if you have a nest egg and are in a good place financially, it makes sense to pay extra toward the principal whenever you can. 

Titsworth offers strategies to help make the extra payments easier to handle. 

“A good rule of thumb is to take a tax refund or year-end bonus and apply it to the principal of your mortgage. It’s simple to do on a yearly basis, plus you are not parting with a large portion of your regular paycheck to fund that extra payment,” she says. 

Another strategy is to add a little extra to each month’s mortgage payment and apply to the principal. That way it doesn’t hurt quite so much. 

As an example, with $200,000 borrowed at a 4.5% fixed rate, making one extra payment of $1,013 per year can take 4.25 years off the loan and save more than $2,500 in interest. Double that extra payment and you could shorten the term by seven and a half years and save more than $9,600 in interest. 

Titsworth points out that in the early years of a 30-year mortgage, the bulk of the payment goes toward interest. The interest is calculated on the outstanding principal balance, so every extra dollar that you can put toward that balance is going to take cost off the back end of the mortgage. 

“PNC believes in doing the right thing by the customer,” Titsworth says. “We talk to our customers about their complete financial picture, from their loans to savings to retirement. We know that most people want to retire in a financially sound position, and typically their biggest debt is a mortgage.” 

Titsworth recommends meeting with a financial advisor who can take a look at your complete picture and calculate the benefits of paying off your mortgage faster while also managing your long-term goals. 

Such a comprehensive approach allows you to make paying for your home a little sweeter.

Learn more about PNC’s mortgage lending options »

Staci Titsworth manages mortgage production for PNC Bank in Northern Ohio and Northwestern Pennsylvania