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Interest or principal
Question: We would like to make additional payments to our mortgage. Does it make a difference whether we make that additional payment towards the principal or towards the interest? Are there any potential tax deduction implications? Thanks! Marc, Chapel Hill, NC
Answer: Yes, you want to direct any extra mortgage payments toward reducing the principal.
Tell the bank to direct the extra payment only toward the principal. (I would check first with your mortgage holder since procedures can vary.) Depending on how much and how often you do it, paying down the principal faster can significantly reduce the term of the loan.