If you were going to pay extra on your mortgage payment, where would you apply it?

Question

To the principal or the escrow?

Answer 1

Escrow is just money they collect in adance to pay property taxes and insurance as they come due. It would make no sense to put extra money into yourt escrow account.

Have them apply the extra money to the principal - and make sure it's done correctly. If they mistakenly apply it as a regular payment it will not have the advantage of reducing the amount of interest you'll owe - you'd simply be a month ahead on the payments.

Which brings up another point - if you make a payment to reduce your principal it does not give you license to be able to skip a payment somewhere down the road. Continue to make all of your payments on time.

Which reminds me of another thing many people don't realize:
Your payments (on a car loan, mortgage, etc.) are due on the due date. If you pay late - even if it's within the grace period and you don't get charged a late fee - you will still wind up paying more because you will accrue additional interest charges for every day late. They tack that on to the end of the loan. Ever wonder why the payment amount on the last payment stub for a car loan is left blank? THIS IS WHY.

I always think of payments due a week before the due date. If the due date is the 15th I always think of it as due on the 8th, and usually send it out on the 3rd or 4th . That way if there's a mail delay it still gets there on time.

I'll stop now. :)

Good luck!

Answer 2

To the principal.

Paying the escrow won't gain you anything, you'll just end up getting the money back after your taxes and insurance are paid.

Answer 3

The principal, you will always wind up better off if you knock down the principal when you can

Answer 4

Like they all said, to the principal.

Answer 5

I WOULD PAY IT TOWARDS THE PRINCIPAL TO HELP THE INTEREST RATE DOWN AND TO PAY IT OFF FASTER

Answer 6

To the principle. That will get the loan paid off faster and save you alot of money from interest.