How much of mortgage payments goes to principal?

Answer 1

Amortized mortgages follow a sliding scale of interest versus principal. During the early years of a loan, a large percentage of your payment goes to paying down the interest amount, and a very small amount, sometimes only a few dollars, goes to lowering the principal. As the loan ages, the proportion changes the other direction, so in the last few years, virtually every dollar you pay goes to pay off the principal balance. Of course, by then, you've paid many thousands of dollars more in interest.

For example, if you get a $200,000 mortgage for thirty years, at five or six percent, by the end of thirty years, you'll have paid over $450,000 in interest alone, if you make every payment on a regular basis.

This is one reason why it is sometimes a good idea to pay extra dollars against your principal, if you can, especially early on. For example, if you add a the next month's principal amount to your regular monthly payment, in 15 years you'll be able to pay off a 30 year mortgage.

Most mortgage companies will send you an "amortization schedule", which details exactly how much of each monthly payment goes towards principal, and how much goes towards interest. The quicker you pay off the principal, the less interest you have to pay, and that can add up to a hundred thousand dollars or more.

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You need to keep track of your Amortization schedule the mortgage companies post and updates after each payment. Make sure your payments states "PRINCIPAL PAYMENT ONLY", then have an attorney ready to file suit of damages.

I have been paying $500.00 on the 1st and $500.00 on the 15th of each month from military pay while my wife sends in the normal current payment every month. When the Income tax return came in, I added it to the $500.00 PRINCIPAL PAYMENT ONLY that was sent to the mortgage company. The Mortgage Company ignored PRINCIPAL PAYMENT ONLY, and posted it to current payment. After a total of 72 phone calls from Germany to the Mortgage Company in the United States which is not cheap, and all they say is "YEAH, YEAH, TOO BAD" and don't intend to fix it where now my next due payment is May 2010 and this is February, then it is time for attorney to take the records from the Mortgage Companies own website and take it to court. So since talking does not good, maybe a law suit to 1) Clear the mortgage debts completely and 2) Punitive Damages for several million dollars, the mortgage companies will then start treating people right.