Making an additional mortgage payment each year could significantly reduce the term of your loan. We've already talked a little bit above about the different general rules you can use to determine what monthly payment you can afford. When it comes to calculating what you can afford with respect to your PITI, a good rule of thumb is that 28% of your gross monthly income is the maximum amount of cash that comes out monthly to cover expenses related to housing payments.
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Making overpayments on your mortgage can be a great way to save money in the long run. But not all mortgages allow for overpayments, so it's important to understand the different types of mortgages and their associated rules before making additional payments.
When it comes to mortgages, it's important to understand the five components that make up your monthly payment. Knowing what each part of your mortgage payment is and how it affects your budget or cash flow can help you make informed decisions.