0
Generally no. If you pay extra on the principal you will pay off the loan earlier, but your monthly payment will stay the same. If you want to lower the payment, you will need to refinance.
But paying extra will help you payoff your loan faster and can save significantly on the interest paid. For example, a 300,000 loan at 5% for 30 years, paying just $200 extra per month reduces the number of monthly payments by 78, or 6.50 years, and reduces the interest and total paid by $69,210.39. A significant savings to you.
Wiki User
∙ 10y ago
Add your answer:
Earn +20 pts
What are the disadvantages of a variable interest rate mortgage?
A variable interest rate mortgage is one where the amount of interest being charged may change during the course of the mortgage depending on the current interest rates, but the usually monthly payment remain the same. The disadvantages of this type of mortgage is that if interest rates go up more of the monthly payment goes towards paying the interest instead of the principal, taking longer to pay off the mortgage. If rates go to high, the monthly mortgage payment may go up, this is rare however.
Can I pay an extra monthly car payment to speed up the pay-off, like on my mortgage?
Yes, if you are paying of a car loan, there is no penalty for paying over your monthly payment. However if your monthly car payment is on a lease agreement you will have to refer to the terms of your lease as to what is allowed.
How much money and time do you save paying an extra monthly payment to principal on a 15 year mortgage?
In general you will reduce the payment by one month for every month's principle you pay ahead. It would take about 8 years. There are many online mortgage amortization calculators available. You will need also the percentage rate.
Why do interest payments decrease each month and the principal payment increases?
Mortgages are typically "front-loaded." That means the interest is paid more aggressively in the beginning of the life of the loan than the principal. As the loan matures, less of your payment is devoted to paying the interest on the loan and more is applied to your principal balance. It is important to mark extra payments as being toward the principal, otherwise your mortgage servicer may apply any extra payments as an additional monthly payment instead of reducing the principal.
How does the down payment affect a mortgage?
A down payment will reduce the principal borrowed which lowers your monthly payments. A large down payment may also help lower your interest rate and may help you avoid paying PMI. If, for example you were buying a $200,000, at 5% for 30 years, the payment would be $1073.64 per month. If you put 10% down, or $20,000, your monthly payment would be $966.28 and you would save about $20,000 in interest.
Can I pay an extra monthly car payment to speed up the pay-off, like on my mortgage?
Yes, if you are paying of a car loan, there is no penalty for paying over your monthly payment. However if your monthly car payment is on a lease agreement you will have to refer to the terms of your lease as to what is allowed.
What are the disadvantages of a variable interest rate mortgage?
A variable interest rate mortgage is one where the amount of interest being charged may change during the course of the mortgage depending on the current interest rates, but the usually monthly payment remain the same. The disadvantages of this type of mortgage is that if interest rates go up more of the monthly payment goes towards paying the interest instead of the principal, taking longer to pay off the mortgage. If rates go to high, the monthly mortgage payment may go up, this is rare however.
Please let me know which of below mortgage options will save us more money?
Sorry, I meant "$400 towards the principal" not $500.
What is the amortization schedule mortgage?
Amortization schedule mortgages are mortgages in which a person makes regular payments, usually monthly, to pay off a loan or mortgage. It is used by calculating the amount of a payment that goes toward the interest and how much goes toward the actual principal. It is used for determining how much of a payment goes toward paying off the principal.
How much money and time do you save paying an extra monthly payment to principal on a 15 year mortgage?
In general you will reduce the payment by one month for every month's principle you pay ahead. It would take about 8 years. There are many online mortgage amortization calculators available. You will need also the percentage rate.
Is paying off my mortgage in full a good idea?
Yes, paying off your mortgage in full is a great idea as you can escape the loan and have peace of mind at night. You can also have more flexibility in your finances as you have no monthly mortgage payment to make.
Why do interest payments decrease each month and the principal payment increases?
Mortgages are typically "front-loaded." That means the interest is paid more aggressively in the beginning of the life of the loan than the principal. As the loan matures, less of your payment is devoted to paying the interest on the loan and more is applied to your principal balance. It is important to mark extra payments as being toward the principal, otherwise your mortgage servicer may apply any extra payments as an additional monthly payment instead of reducing the principal.
How does the down payment affect a mortgage?
A down payment will reduce the principal borrowed which lowers your monthly payments. A large down payment may also help lower your interest rate and may help you avoid paying PMI. If, for example you were buying a $200,000, at 5% for 30 years, the payment would be $1073.64 per month. If you put 10% down, or $20,000, your monthly payment would be $966.28 and you would save about $20,000 in interest.
Where can one find a mortgage amortization calculator?
A mortgage amortization calculator helps you determine how much of your monthly payment goes towards principal and interest over the span of your loan. The amortization calculator also helps you determine how much you can save by paying off some of the principal before hand. There are many places to find a mortgage amortization calculator online but one of the most trusted sources is HSH online mortgage resources.
Bi-weekly Mortgage Calculator?
Bi-weekly Mortgage Calculator This calculator shows you possible savings by using an accelerated bi-weekly mortgage payment. By paying _ your monthly payment every two weeks, each year your mortgage company will receive the equivalent of 13 monthly payments instead of 12. This simple technique can shave years off your mortgage and save you thousands of dollars in interest.
In paying off a mortgage loan using level periodic payments the amount of the periodic payment that goes toward the reduction of principal increases over the life of the mortgage is it true or false?
True.
A bi weekly mortgage reduces the term of a thirty year mortgage to how many years?
By making half of a monthly mortgage payment every two weeks, homeowners can save a substantial amount of money over the term of a mortgage loan. Typically, if a homeowner pays half of their monthly mortgage payment every other week, they will reduce a 30-year fixed-rate mortgage by approximately seven years. The reason is simple: instead of making 12 monthly payments, homeowners are making half a payment every two weeks, resulting in 26 half payments per year, or the equivalent of 13 monthly payments in a 12-month period. In the end, the principal is paid down a great deal faster, saving a significant amount of money on mortgage interest payments. Most banks and mortgage lenders offer bi-weekly payment options, and many even offer a weekly mortgage payment option. If you're willing to pay your mortgage bi-weekly, and your lender offers the opportunity for weekly mortgage payments, take full advantage. Does this opportunity to pay off your mortgage early sound too good to be true? Well, there is one caveat: most banks that offer the bi-weekly or weekly payment options also charge a fee to sign up, often hundreds of dollars. However, there is a way to achieve the same results without having to pay these unnecessary fees. Merely make one extra monthly mortgage payment per year or simply distribute an extra month's payment evenly throughout the year by paying down the principal each month. Most monthly mortgage statements provide an extra line for an "extra principal payment." To see exactly how much money a bi-weekly or weekly payment plan can save you over the life of your mortgage loan, an online accelerated mortgage calculator will do the figuring for you. You will be pleasantly surprised at how much time will be removed from your mortgage term.
