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Wishful Thinking |
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Dear Edith: On a 30-year mortgage, making one extra payment a year. How much time is reduced on the life of the loan? I do not recall if someone told me or if I read that it is reduced by 12 years. Is this wishful thinking? |
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I'm afraid it is. If a full extra payment is made every year from the beginning, the life of a 30-year fixed-rate loan is reduced by about seven years. The figure is only an estimate, because individual amounts for taxes-and-insurance escrow vary, and the particular interest rate also makes a difference |
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Edith
Originally published on January 1, 2005 |
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