Mortgage Question

[Autumn1102]

I know that a lot of questions I ask seem simple and obvious, so sorry about that.

I was wondering about my mortgage. If I owe X amount of dollars per month, and then I pay that plus $100 extra per month, is that $100 automatically taken off of the principle or just the total loan or what? Is there some kind of calculator that shows hoe much faster you can pay a mortgage off by adding so much extra to it per month?

Thanks

[della92]

If you pay an extra $100 on your mortgage, then it comes off the principal balance, so that then you are only charged interest on the new principal balance.

Example:
10,000 balance
500 payment, lets say only 100 is going to interest & 400 is going to principal
100 extra payment
600 total payment

After you make your payment + extra payment, then the new balance will be 10,000-400 principal-100 extra principal=9,500 new principal balance, then interest will begin compounding on the 9,500 balance (instead of 9600 balance). This can save you tons of money over the life of a mortgage.


I don't have a specific website for ya, but you could try googleing mortgage calculator.

Della

[Samigirl]

Make sure you specify X amount goes to principle only....then make sure that's how they apply it.

[Jenna]

http://www.dinkytown.com/

Great site for calculators.

[sdrjeolsen]

www.bankrate.com has a mortgage calculator as well. You can print out an amortization schedule showing what happes with different amounts added to the payment.

[cottageliving]

you've already been given good info.... but please do yourself a favor and contact your mortgage company for a print out of your payment history.

You need to verify that they have applied each of the extra $100 payments to your principal.

Going forward, make sure you direct them to apply all extra funds to principal.

You are smart to pay extra each month -- that will save you TONS of interest and will greatly reduce the term of your loan.