3 Thoughts on On a home mortgage, What does it do to make principal payments early?
  1. Reply
    February 12, 2014 at 11:09 am

    Saves you a month worth of interest.
    Also make 1 or 2 extra payments a year any time you want.
    You may the entire payment (not just the principal),

    Google: Extra Payments Mortgage Amortiazation Calculator.

  2. Reply
    February 12, 2014 at 12:07 pm

    Making additional payments toward your mortgage principal reduces the amount of principal you own. Interest on a loan is calculated as a percentage of the principal on a loan. So, if your principal is reduced, then the amount being paid to interest is reduced. If you keep this up, you can pay down your house much earlier than the 30 years that they typically have you locked in for. Also, you end up paying less in interest over the term of the loan if you can pay it off earlier.

    When you pay interest early, it’s called a pre-payment

    Karl’s Mortgage Calculator ( http://www.drcalculator.com/mortgage/ ) can help you run various prepayment scenarios.

  3. Reply
    February 12, 2014 at 12:19 pm

    On a 30 Year Mortgage, making 1 extra mortgage payment (principal & interest) per year pays your home off in about 19 years.

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