What effect does paying an extra small bit of principal on a mortgage have on the life of a 30 year loan?
A)It has no impact on amount of interest paid but shortens the length of the loan.
B)It saves money in interest and shortens the length of the loan.
C)It increases the amount of interest paid and lengthens the length of the loan.
D)It has no impact on either interest or life span of the loan.

Question

Quizplus · Accepted Answer

Paying an extra small amount of principal on a mortgage has a significant impact on reducing the total interest paid and shortening the life of the loan. Even a small amount of extra principal payment over the course of 30 years can save thousands of dollars in interest. Therefore, option B is the correct answer.

What Effect Does Paying an Extra Small Bit of Principal