How much will I save by prepaying my mortgage?

Q: I have 13 years left on a 15 year loan at 4.375% with a balance of $78,100. How much time would I knock off of the mortgage if I pay an additional half of the payment on the 15th of each month and is the better than just paying one extra payment a year via extra principal each month?

A: With a fairly small loan amount and a short loan term you already have paid for several years, it will be hard to obtain substantial savings or term shortening by switching to a bi-weekly payment. You can do complex prepayments using our Homebuyer's Calculator Suite; we reverse-engineered your numbers to determine that you started two years ago with about an $87,000 loan, and starting to make one extra payment per year with next month's payment, you'll shorten the total loan term by about 16 months, saving about $2,810 in interest charges.