2006-10-22 03:17:32 · 4 answers · asked by artfay 1 in Business & Finance ➔ Renting & Real Estate
Principal is the actual part of the money going to pay back the money borrowed. The interest is the money they charge for using their money.
By paying double principal you will cut your loan payback time in half and will save a WHOLE LOT OF MONEY.
2006-10-22 03:26:48 · answer #1 · answered by tercir2006 7 · 0⤊ 0⤋
Answers previously are mostly correct. Think about it this way. Every dollar you borrow, you are borrowing for 30 years. Therefore if you pay down the principal by making extra payments, you are NOT paying interest on that money for the full term of the mortage. For example, just by making a bi-weekly payment, you can save yourself approximately 7.3 years off a 30 year note. It's somewhat the same as making one extra principal payment a year but not quite. (That saves you about 5 years). Hope this helps!
2006-10-22 08:51:06 · answer #2 · answered by MJ 4 · 0⤊ 0⤋
If you state that the extra payment is going toward the principal, the money actually goes to something you are investing in and will eventually lower the amount of interest which is what the bank has invested in. So, do you want to make yourself rich or the bank rich? You'll have much more equity in the house.
2006-10-22 03:21:34 · answer #3 · answered by just browsin 6 · 0⤊ 0⤋
Usually someone makes an extra pmt. to go towards the principal but pay attention and check your statements to be SURE thats what their doing.
2006-10-22 03:27:08 · answer #4 · answered by luckylindy0 4 · 0⤊ 0⤋