The Difference Between Mortgage Prepayment and Payoff
As a homeowner or prospective buyer, understanding the intricacies of mortgage management can save you time, stress, and potentially thousands of dollars. Two key concepts that often confuse borrowers are mortgage prepayment and mortgage payoff. While both strategies can reduce the overall interest paid and shorten the loan term, they function differently. Let’s break down what each term means and how they can affect your mortgage journey. What Is Mortgage Prepayment? Mortgage prepayment occurs when you make payments toward your mortgage above and beyond the required monthly installment. This extra payment goes directly toward reducing the principal balance of your…