I would like to begin paying an extra house payment a year.How much will this really benefit me!They seem to always find a way to go up on a fixed loan. Does it make any difference at the beginning or end of the year! Just curious!
2007-06-19 23:27:26 · 6 answers · asked by need2know 5 in Business & Finance ➔ Credit
Paying an extra house payment per year can cut years off of your mortgage. I'm sure it's better to pay it early in the year because it cuts down your interest but paying it at all is the important thing. I took my monthly payment amount and divided it by 12 and then added that amount to my monthly payment. That way I was paying equal to one extra house payment per year but was dividing it over the course of the year instead of paying one extra payment all at once. It fit into my budget better that way.
2007-06-20 02:14:28 · answer #1 · answered by angela 6 · 2⤊ 0⤋
Angela and Iceman gave good answers and I agree with them 100%. I just wanted to give you a numbers example of how pre-paying a mortgage can help:
With No Prepayment:
Loan Amount: $70,000
Interest Rate: 8%
Years to Pay Off: 30
Total Interest: $114,903.20
Interest Savings: $0
With $50 Per Month Prepayment:
Loan Amount: $70,000
Interest Rate: 8%
Years to Pay Off: 22
Total Interest: $75,924.36
Interest Savings: $38,978.84
With One Mortgage Prepayment Per Year:
Loan Amount: $70,000
Interest Rate: 8%
Years to Pay Off: 23
Total Interest: $83,988.94
Interest Savings: $30,914.26
It doesn't really matter, just as long as you do it. On a 30 year fixed loan, you can stand to save a bunch of money. Just $50/mo can make a difference. I know I spend that on movies, dining out and other misc. things that I could do without.
Cheers!
2007-06-20 05:17:10 · answer #2 · answered by YSIC 7 · 1⤊ 0⤋
Sooner is better, because the money PAID on the loan will no longer be subject to interest -your over-all payments will be less when it is all said and done. So, pay it NOW -and as soon as you can pay it again, this year, next year or whenever, DO it. And, you can make partial payments at any time as well.
2007-06-19 23:37:26 · answer #3 · answered by JSGeare 6 · 2⤊ 0⤋
in the month where you don't have a bill to pay for!!
and yes any amount will make a difference to your loan, even small amounts over time will cut down your loan...
2007-06-19 23:32:28 · answer #4 · answered by Anonymous · 1⤊ 0⤋
Early in the year when you extra cash laying around. Maybe in March -April when you get your tax refund.
2007-06-20 03:15:30 · answer #5 · answered by Anonymous · 2⤊ 0⤋
SUMMER
2007-06-19 23:29:23 · answer #6 · answered by Anonymous · 1⤊ 0⤋