Is it true that when you pay your mortgage. If you send 50.00 extra bucks with your payment .?

Question

Years get knocked off because you will have build equity and paid alot of your interest.

Answer 1

If you send one extra payment per year, I think it takes off something like 6 or 7 years off your mortgage...good for you if you do it!

Answer 2

Absolutely. The first few years of a mortgage, nearly every dime of your regular payment is interest only. By remitting an extra $50.00 a month, you are reducing the principle at a much faster rate, so the amount of interest you pay is reduced.

Great habit to get into! I paid off a car 8 months early, out of a 5 year payment plan, by sending $25-$100 a month extra. No payments were sooooo nice.

Answer 3

The easiest way to do that is to split your monthly payment into two equal payments and make your payments based on that. For example:
You are paying a monthly mortgage of $1,000 per month.
Divide that into two equal payments of $500 every two weeks--this way it doesn't cost you any more per month, but instead of making 12 monthly payments of $1,000, you will make 26 payments of $500 (26 bi-weekly payments equals 13 monthly payments).
So you will be making 13 of your monthly payments each year instead of 12 and it costs the same monthly because you just divided the monthly payment in half to accomplish it.
Actually, you'll be making 13 monthly payments each year, which will reduce you overall mortgage by 6 to 7 years (on a 30 year mortgage). The extra payments go directly to the principal of the loan, not the interest and should save you a ton of money.

Answer 4

Prepaying on your mortgage payments does significantly reduce the the time in which you are making payments. What it also does is reduce the amount of interest you are paying over the life of the loan.

To see how prepaying a mortgage will help in your particular situation, try using Karl's Mortgage Calculator. My family has found this tool to be particularly helpful. You may have to download a java component if you don't have one already installed on your PC.

http://www.jeacle.ie/mortgage/

Answer 5

you need to have a mortgage that allows overpayment, if you have this then you will be allowed to over-pay a certain amount (normally a maximum of 10%) that will be used to pay off some of the equity you owe. the result of this is that you will owe less. you can either use the reduced amount to reduce the time of the mortgage or to reduce the individual payments needed.

Answer 6

yes but, now you have the house but, no money

Answer 7

50 dollars won't do much... but yes, your concept is correct.

Answer 8

Yes...