How a Simple Strategy Can Shorten Your Loan and Save Thousands in Interest
When you buy a home in Westchester County—whether in Chappaqua, Pleasantville, Armonk, Scarsdale, or anywhere in the surrounding towns—your mortgage is likely one of your largest monthly expenses. But there’s a surprisingly effective way to reduce the total cost of your loan and pay it off years sooner: making just one extra mortgage payment per year.
This is not a financial gimmick. It’s basic math—and it works.
Let’s break down why.
Why One Extra Payment Makes Such a Big Difference
Your mortgage payment consists of:
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Principal (the amount you borrowed), and
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Interest (the cost of borrowing that money).
In the early years of a mortgage, most of your monthly payment goes toward interest, not principal.
But when you make an extra payment—and apply it specifically toward principal—you reduce the amount the lender can charge interest on. That means more of your future monthly payments go toward paying down the loan instead of paying interest.
Over time, this snowballs into significant savings.
How Much Can You Save? A Simple Example
Let’s assume a $700,000 mortgage at 6.25% on a standard 30-year term.
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Your monthly payment (principal + interest) is roughly $4,312.
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Over 30 years, total interest paid would be about $856,000.
Now, make one additional full mortgage payment per year (about $4,312 extra annually).
Result:
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You would pay off your mortgage in roughly 25–26 years instead of 30.
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And you would save around $150,000+ in interest.
(Yes, one extra payment per year = shaving four years off your mortgage.)
If you stay in the house long-term, this is enormous value.
If you sell sooner, you still benefit by reducing your principal more quickly—meaning more net proceeds at resale.
How to Make the Extra Payment Easy (No Budget Shock Required)
You don’t need to write a large lump-sum check once a year. Many homeowners choose one of these simple approaches:
1. Divide Your Payment Into 12th’s
Take your monthly payment and divide it by 12.
Add that amount to your mortgage every month.
Example:
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Monthly payment: $4,312
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Extra monthly principal contribution: $360
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Total monthly payment: ~$4,672
Most people don’t even notice the difference once they get used to it.
2. Set Up Biweekly Payments
Instead of one monthly payment, split it into two biweekly payments.
There are 26 biweekly periods per year → equal to 13 monthly payments.
Same result: one extra payment built in automatically.
3. Apply Windfalls
Tax refunds, bonuses, or year-end compensation are common sources:
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Even partial extra payments help accelerate payoff.
Important: Make Sure Your Extra Payment Goes Toward Principal
When submitting your extra payment:
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Look for a checkbox or field labeled “apply to principal only”, or
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Contact your lender to confirm how they handle additional payments.
If applied incorrectly, it could go toward future interest, which does not provide the same benefit.
Why This Strategy Works Especially Well in Westchester County
Homes in markets like Chappaqua, Bedford, Briarcliff Manor, and Scarsdale tend to involve:
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Higher loan amounts
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Longer ownership horizons
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Stable resale demand
This makes mortgage interest one of the biggest long-term household expenses.
Reducing even a few years of payments can have a major effect on:
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Wealth building
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Cash flow in later years
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Retirement planning
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Home equity growth
When paired with Westchester’s historically strong property value appreciation, this creates a powerful equity-building strategy.
Final Thought
Making an extra mortgage payment each year is one of the simplest, most reliable wealth-building strategies availableto homeowners. It doesn’t require refinancing, changing lenders, or taking on any risk.
Just one small financial habit can:
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Reduce your loan term by years
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Save tens or even hundreds of thousands in interest
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Increase your net worth faster
If you're considering purchasing a home or want guidance on refinancing strategies and home equity planning here in Westchester County, I’d be happy to walk you through your options.
