payments if i pay 25,000 $ one time payment to my principle. ?
can i do that ? if yes will my monthly payment reduce ?
2007-09-16 12:38:12 · 9 answers · asked by bluelink 1 in Business & Finance ➔ Personal Finance
sorry i guess everyone doesnt know how to READ.
if the mortgage is a INTEREST ONLY mortgage...then it will reduce the monthly payments. It will take affect by the next mortgage payment. Remember that you are paying INTEREST ONLY on the PRINCIPAL...if the PRINCIPAL is lowered then you will only pay on that ONLY.
if the mortgage was a 30yr FIXED principal AND interest....then it will only lower the term
2007-09-16 13:33:47 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Your monthly payment will only reduce when it recasts after the 5 year mark. As long as you don't have any prepayment penalties you can add that. What you might try doing is calling your mortgage company and asking if they can refigure the loan without a refinance, with you making a lump sum payment.
$25K will keep your payments the same for now since you are paying only interest. However, when your loan adjusts $25K will be deducted from your principle, therefore payments may be lower. But, depending when the 5 years is up, you may have a higher interest rate. You can refi before then or have the $25K help to offset any difference.
2007-09-16 12:51:55 · answer #2 · answered by Kurious1 2 · 0⤊ 0⤋
If you pay off some of the principle than yes your monthly interest only payments would reduce. But if you kept them the same, you would keep knocking principle down and end up owing a lot less at the end of 5 years.
But, you need to read the fine print of your mortgage, there may be a pre-payment penalty so you need to make sure that they don't screw you over.
Good luck
2007-09-16 15:22:21 · answer #3 · answered by Gem 7 · 0⤊ 0⤋
You need to check the language on your mortgage. You should be able to pay a one time payment of 25,000 but make sure you let them know that it is toward the principle. It should effectively reduce your monthly payment because the interests is based on the principle. Also depending on the amount of your home it could also get your principle below what is necessary to remove your PMI (if you are paying it).
2007-09-16 12:48:52 · answer #4 · answered by MZOrr 2 · 0⤊ 0⤋
No. Your monthly payment will not change. The $25,000 will be applied to the principle, but it will come off the back end of the loan. If you want to reduce your monthly payment, you need to refinance and put the $25,000 as a down payment.
2007-09-16 12:46:22 · answer #5 · answered by crazydave 7 · 0⤊ 0⤋
Read your mortgage contract, but a one time payment probably wouldn't reduce your payment, it would just get the loan paid off faster. You'd be better off trying to convert the ARM to a fixed rate mortgage before the end of that five years.
Since the loan is interest only, it's possible but not real likely that since your principal would be reduced, the payment might also be.
2007-09-16 12:57:41 · answer #6 · answered by Judy 7 · 0⤊ 0⤋
No, your montlhy payment won't go down at all. It will take money off the back end of the loan. Paying on the principal will only reduce the length of the loan, not the payments.
2007-09-16 13:26:09 · answer #7 · answered by dougzinboston 4 · 0⤊ 0⤋
first make sure your loan will allow a 25k payment applied to principle
if you can make the check out an add to subject or the memo this exact wording
"apply to principle"
2007-09-16 14:52:17 · answer #8 · answered by Anonymous · 1⤊ 0⤋
Mine didn't = I pay on my principal all the time
2007-09-16 12:46:21 · answer #9 · answered by true_value5 4 · 0⤊ 0⤋