Lakes Area Realty · Buyer Tools
You can't control the rate. You can control how long you pay it.
Paying extra toward principal doesn't lower your interest rate. Only your lender can change it — a new loan, a modification, or a buydown. But it will pay your loan off years sooner, and every dollar of interest you would have paid in those years stays with you. Put your numbers in below and see for yourself.
Your numbers
A new 30-year loan. Change anything.
These are example numbers. Type over any of them with yours.
Set up for a new 30-year purchase. Choose More options if you already have a loan.
Leave at 0 if you haven't bought yet.
A tax refund, a bonus, proceeds from a sale.
Interest you never pay
$155,390
Sooner you own it
9 yrs
New 30-year loan · $320,000 at 7.00% · $300 extra toward principal each month.
Loan amount
$320,000
Scheduled payment
$2,128.97
Paid off in
21 yrs
Principal and interest only. Taxes, insurance, HOA dues, and mortgage insurance are not included.
Does paying extra lower your interest rate?
No. Be careful with anyone who tells you otherwise.
You'll see calculators that report an "effective rate" — that a 7% loan somehow becomes 5.1% once you pay ahead. That number is worked backward from your total interest, and it's not a rate anyone will honor. Your note says 7%. Your servicer says 7%. Your APR is what it is — fees included — and prepaying doesn't change it either.
Paying ahead still saves you real money. It saves it by reducing what you owe and shortening the loan, not by changing the rate you were quoted.
Ask the seller for a buydown
A seller-paid 2-1 or 3-2-1 buydown lowers your rate for the first years of the loan. It's the only thing on this page that changes the rate itself. In this market plenty of sellers will cover one, and it's worth asking.
About bi-weekly payments
Twenty-six half-payments a year comes to thirteen monthly payments a year. Add a twelfth of your payment each month and you have done the same thing, without paying a service to do it for you. If you do pay bi-weekly, confirm your servicer applies each half-payment when received — some hold them until a full payment accumulates, which erases the benefit.
Before you start paying extra
You'll want to confirm with your servicer that extra payments go toward principal, and ask whether your loan carries a prepayment penalty. Both vary.
Let's run it on a home you're considering.
Send us a listing and we'll put in the real price, then tell you whether that seller is likely to help with a buydown.