I have a stupid question?

Mortgage amount: $ 150,000
Mortgage term: 30 years or months 360
Interest rate: 7.00 % per year

payment $997.95

Regular schedule of payments
30 years or 360 months
Cumulative Totals
payments $359,258.23 / Interest $209,258.23 / Principle $150,000.00 / Ext. Payments $0.00

1 time 20,000 payment 1st month 1st year
20 years 6 months
Cumulative Totals
payments $265,263.38 / Interest $115,263.38 / Principle $150,000.00 / Ext. Payments $20,000.00

1 time 20,000 payment 1st month 1st year, 50.00 extra per month towards principle.
18 years 6 months
Cumulative Totals
payments $252,127.09 / Interest $102,127.09 / Principle $150,000.00 / Ext. Payments $31,050.00

1 time 20,000 payment 1st month 1st year, 100.00 extra per month towards principle.
16 years 11 months
Cumulative Totals
payments $241,872.32 / Interest $91,872.32 / Principle $150,000.00 / Ext. Payments $40,200.00

1 time 20,000 payment 1st month 1st year, 500.00 annually begining of the year starting second year. 100.00 extra per month towards principle. 15 years 10 months
Cumulative Totals
payments $235,404.25 / Interest $85,404.25 / Principle $150,000.00 / Ext. Payments $46,400.00


If you could refinance at a lower interest rate and no closing costs say Cabinfevers 4%,

you payment on the same loan would be 716.13 rather then 997.95. I would if possible continue making the higher payments applying the extra towards principle. if you don't have it though you can just make the regular payment.

Regular schedule of payments
30 years or 360 months
Cumulative Totals
payments $257,801.84 / Interest $107,801.84 / Principle $150,000.00 / Ext. Payments $0.00

1 time 20,000 payment 1st month 1st year
23 years 4 months
Cumulative Totals
payments $220,115.50 / Interest $70,115.50 / Principle $150,000.00 / Ext. Payments $20,000.00

1 time 20,000 payment 1st month 1st year, 281.82 (difference between loan payments) extra per month towards principle.
14 years 4 months
Cumulative Totals
payments $190,918.61 / Interest $40,918.61 / Principle $150,000.00 / Ext. Payments $68,191.22


These are examples, math may be off a little. But as has been Voiced in a earlier post. Unless you have a sure nest egg or Back up funding, I would hang on to some of that money for the what if's. You may need it to cover some payments.

[QUOTE=Fowler;5477285]Thanks everyone, I wasnt sure how this works. As it is now I will be 70 before it's paid off. I need a plan to pay it off early. So I dont have to worry about it when I am 65.
So would it be better to pay more on princple monthly? I have friends that had a 30 year mortgage and by paying extra, paid off their house in 15 years.
Any suggestions?[/QU


I paid extra each month...sometimes only $10.......sometimes a double payment. It gets it down fast....my mortgage was paid off 8 years early.

So does one just write 'principal only' on the memo line of the 'extra' payment check? Will that suffice?

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Break it down, You can write it in the memo line if paying by check, if in person at the bank specify and check the receipt. I would use "apply to principle" for additional payments.

No, but it'll go towards principle and save you tons of interest in the long run.

I've thought of encouraging DH to pay our mortgage every other week. I've heard that paying credit cards and mortgages bi-weekly can help cut down interest costs over the long term.

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Moms don't look at things like normal people.
-----DD

Paying off a mortgage early is always a GOOD thing - however, before doing so - make sure you are allowed to! Some loans have wording in it that extra money paid goes toward the interest rather than the principal.

You want to make sure the extra money is going towards the principal amount - NOT the interest!

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Michael W. Smith in North-West Pennsylvania

"Everything happens for a reason."

I have three things to share:

1. Like everyone has said, make sure the additional payments are going to the principal, not the interest.

2. The banks and lending companies are in business to make money from lending. Make sure your additional payments are being applied to your prinicipal, not thrown into escrow, or something that only benefits the bank.

3. All my life, I have added additional payments to loans I've had. Even if it was just $10, or even the pocket change I was carrying. Everyone I've ever met laughed hysterically and said "$10.47? Are you kidding? That won't make a difference!" I am here to tell you, as living proof, that those extra payments actually do make a difference.

When I pay our mortgage I round the payment up to the next hundres. I won't say the complete amount of our mortgage but it ends in 775.26 or something close to that. I round the payment up to end in 800.00 even so I am paying about an extra $24 dollars or so each month.
Also my husband gets paid every two weeks, so each paycheck I take out half of the house payment and mail it in after i get two halves. By doing this I actually make 13 payments a year and will gradually get ahead on payments.

Thanks!

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WOW thanks for all the advice!! I feel more informed now for when I call my mortgage lender.

Thank you everyone!!!

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"If you tickle the earth with a hoe she laughs with a harvest."
- Douglas William Jerrold

Real is Beautiful -Sherry in Maine

I am 47

No Joshie, you Must stipulate that it goes to principal only. I made the mistake before.

definitely write down. If you don't they will not apply to principle and just pre-pay the interest.

When I bought my new truck - I was already making house pymts. My banker suggested on the truck to do a balloon pymt.Every 6 months the balloon pymt was rescheduled and in the end I paid next to nothing on the interest! it was an extremely good deal. I know some banks require balloon pymts on houses. I think with the interest now it might not be a bad idea.
I had my house on 10yrs but paid it off in 5 by making the extra pymt on principal. But I always went in to the bank to make the extra pymt to make sure it was put on the principal.
There are lenders who will not allow extra pymts and some the way the note is set up by paying ahead can mess up everything royally. So do find out for sure what you can do.

NO Thats not true..
Paying off a mortgage early is only a good move if the interest rate is MORE than the inflation rate.OR if there are other outside factors to concider. (like you dont wanna bemaking paynents at 70.)

Funny everyone says that extra payment will go towards interest. Maybe there is some law in NC about excess payments, but every bank I have worked for and dealt with will apply any extra payment to principal. Always creates a problem when someone is going out of town and they send in two payments because the second one always gets applied to principal since the second payment has not "dropped" yet.

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http://www.lindsayfarmonsilvercreek.blogspot.com/

I have a little coupon book that has one for every month's payment. If I pay extra I put the extra amount on whatever line I want the extra to go for, whether it is principal, late fees, extra interest or whatever. And if I send one in early as long as it has the next month's coupon it goes for that month.

Do you have a payment book? Usually there are places on the monthly 'coupon' you send in with the check that designate where extra funds will be placed.

We refied to a 15 yr mortgage about 10 yrs ago, then paid extra every month. When we sold that house in May the mortgage was nearly paid...gave us lots of options as sellers.

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I'm not easy to live with, I know that it's true. You're no picnic either baby...

Don Henley

No, we just closed on our new place on October 4th. No payment book yet, but I'm anxious to see what it looks like when it gets here!

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Fowler, in reference to paying a mortgage off a little each month; you must keep meticulous records if you handle it this way. I used this method many years ago, and then when I sold the home, it seemed to me that all that extra principle had not bee applied correctly. When I questioned the mortgage holder, they responded that unless I give them specific instructions, they apply it to both P & I. What??????

I asked them to go back and apply all of my extra payments to the P. At first they refused, but I was about to come unglued, and I went straight to my loan officer, who I knew much better, and asked him "how many people pay extra with the idea of paying the bank MORE interest?". Man, but I was getting PO'd.

Long story short, they went back and recalculated the entire payoff, and it was a whole lot less. Had I not kept records, I would never have known.

Anyway, for me, the lesson learned is to pay in easy to remember numbers such as $5000, $10,000........and do it once per year at the same time each year.......and keep a file with all payment receipts in it.

This way, the bank will reach the payoff date at the same time you do.

Good luck

B

If you use Quicken or Quickbooks, just put down the interest and principal each month in separate accounts so you'll know exactly how much you paid at the end of each year (or at the end of the mortgage contract).

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