Let say I borrow $200,000 on a 30 yrs fixed and I make my monthly mortgage payment. At the end of the year, I have some extra money left over, can I put that into the mortgage and pay extra? If yes, how would they recalculate my payments for next year? Is there any fees for this? Do I just send them a check and say put it down on my principal? What about the interest rate?
2007-07-13 11:35:44 · 6 answers · asked by V for V 2 in Business & Finance ➔ Renting & Real Estate
Your payments are fixed. An extra payment or amount is applied to the principal and shortens the length of the loan. The interest rate is not affected. The total amount of interest can be affected greatly - $1,000 extra paid now at 6% will save $1,800 in interest over the life of the 30 year loan. Most loan payment coupons have a spot in which to write the extra principal payment amount.
2007-07-13 11:41:05 · answer #1 · answered by Flyboy 6 · 1⤊ 1⤋
On your check for the extra payment put "principal payment" and keep it separate from your regular payment.. If you have a fixed rate mortgage then this action would not change your payment, however every payment thereafter you will pay less interest than had you not paid the extra principal payment, thereby reducing the amount called "total of payments" on the truth in lending statement from when you closed on the loan, meaning that you will pay your loan off faster. Paying a principal payment does not change your interest rate on a fixed rate loan. One more thing, you should not pay anyone for making a voluntary principal payments. There are programs that debit your checking ever 2 two weeks which equates to one every payment a year, but this can be costly, so do it on your own and save money. Hope this helps
2007-07-13 18:50:48 · answer #2 · answered by Etta P 4 · 1⤊ 0⤋
It won't reduce your payment, unless you are on an interest only mortgage, but it will reduce the principal balance a lot faster, and there are no fees for doing this. In fact, by providing one extra payment on a 30 yr fixed mortgage per year, one can usually expect to have the loan paid off 6-7 years earlier.
2007-07-16 18:50:32 · answer #3 · answered by Anonymous · 0⤊ 0⤋
You absolutely should be able to make extra payments toward principle at any time. It won't affect your interest rate. Nor will it affect your payments the following year. But it will reduce the term of your loan. If done regularly it could reduce the term substantially and thus the total amount of interest paid on the loan. You might even want to inquire with your lender about making smaller, bi-weekly payments instead of monthly payments. This would give you 26 payments per year or the equivalent of 13 monthly payments. Doing that can ultimately pay off a 30 year loan in as little as 15-20 years.
2007-07-13 18:45:59 · answer #4 · answered by Tom K 7 · 1⤊ 1⤋
It doesn't change your payments or interest rate. It changes the accrual schedule and your load will be paid off a lot sooner.
Yes, just send them an extra check and a note telling them that this is an extra principle payment.
2007-07-13 18:40:41 · answer #5 · answered by Ted 7 · 1⤊ 1⤋
check this site that i found...
http://the-mortgage-loan-guide.com
..
2007-07-15 03:42:58 · answer #6 · answered by harry B 3 · 0⤊ 0⤋