Q. If the monthly payment on a traditional 30-year fixed-rate loan is $899 a month, what happens if you pay $1,798? Would the additional $899 decrease the outstanding principal or would it be used against the next month's payment, meaning part of it would be used to pay the second month's interest?

A. When you add extra money to your payment, all of it is used to pay off your principal. None of the additional money is applied towards the next month's payment. No matter how much extra you add to any given check, you'll have to pay at least $899 every month until the loan is paid off.

Of course, those extra payments will help you to pay the loan off more quickly. If, for example, you added $899 to your first payment, and that is the only extra payment that you made, it would reduce the length of your mortgage by five months and save you more than $4,000 in total interest costs.

If you were to add $100 to your payment every month, you would pay off your 30-year mortgage in just over 23 years and pay only $128,171 in interest over the life of the loan as opposed to $173,757 -- that's over $45,000 in savings.

Go to Interest.com's mortgage calculator to see exactly how this works. Enter information about any loan and click on "Show amortization table." If you make extra payments, you pay the principal down more quickly, pay less in interest and retire the loan earlier.

Whether you're buying a home or refinancing an existing mortgage, we have a mortgage calculator that can help you make the right decisions.