Extra Payment

[cosmocentral26]

Forgive me for my ignorance, I am new in this. I have a question on mortgage.

Lets say I got a 30 year fixed APR loan. Now I have to make monthly payments. If on any month I make an extra payment, does it reduce my total principle left? Or the lender will take part of it for interest, part for principle?

As an example lets say in a month the balance on the loan is 200,000. Now I make a 10,000 extra payment on top of my monthly payments. Now does my balance come down to 200,000-10,000=190,000?

[Tony Zito]

Yes it will come off the balance but be sure to write a seperate check, make a copy of it, write in the memo-"PRINCIPLE ONLY" also write a note telling them to apply to principle only and staple it to the check.

I know it sounds extreme but it s necessary!

another bit of information for you about payng extra, if you pay one extra payment a year (on your principle) you will pay your 30 year mortgage off in about 18 years!

Tony Zito

[cosmocentral26]

Yes it will come off the balance but be sure to write a seperate check, make a copy of it, write in the memo-"PRINCIPLE ONLY" also write a note telling them to apply to principle only and staple it to the check.

I know it sounds extreme but it s necessary!

another bit of information for you about payng extra, if you pay one extra payment a year (on your principle) you will pay your 30 year mortgage off in about 18 years!

Tony Zito

Lot of people I know don't know this piece of information. I asked some people I know who own houses, they told me extra money goes to paying the interest first.
Thanks for the information. Rep added.

[RehabEd]

On my payment stub, there's an extra line for "Additional amount, if any, you want applied to your principle". One check, one payment stub, period.
Also, you can check your payment receipt immediately, to be sure.

Tony Zito - I figure that more than half of what you pay during a 30 year loan is interest and you could cut the interest amount significantly by making a few extra payments here and there.
But, I used a couple of online amortization schedules (using my current mtg. as a basis) and found that making an additional payment per year (towards principle of course), only shaves five years off of a 30 yr. loan. Sounds like you might have gotten info from one of those grapevine rumors that grew into a monster. I have had a long day though, so I might be doing something wrong. Could you elaborate on this??? Thanks.

[Codythebest]

Yes it will come off the balance but be sure to write a seperate check, make a copy of it, write in the memo-"PRINCIPLE ONLY" also write a note telling them to apply to principle only and staple it to the check.

I know it sounds extreme but it s necessary!

another bit of information for you about payng extra, if you pay one extra payment a year (on your principle) you will pay your 30 year mortgage off in about 18 years!

Tony Zito


And if you pay your, let's say $1,000 monthly payment in 2 payments of $500 every first and 15th of the month, you reduce the loan life of another 8 years !!

[cosmocentral26]

And if you pay your, let's say $1,000 monthly payment in 2 payments of $500 every first and 15th of the month, you reduce the loan life of another 8 years !!

Could you ask a bank to do so for 30 year fixed APR loan?

[TwiloMike]

Sure- you can take a 20 year loan.