[quote=EDS_;53989975]
Quote:
Originally Posted by Snowpacked
That's generally correct but incomplete.
Most mortgages allow for overpayments to be applied to ones principal balance from day one.
Add a little to each payment earmarking the extra towards interest.
Add a full or partial payment anytime earmarking the extra towards interest.
Add say a $25,000 payment earmarked towards principal and the principal balance will decrease by $25,000.
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whether adding extra principal to each payment is a good idea is a very debated topic ...
it can really put pressure on other investments you need to generate income in retirement under a lot more pressure to " have a good time frame " .
the less time you give market investments to grow the more time frame dependent they become . many really hurt themselves when they wait until they pay off the house channeling extra money in , then they hit a poor strech of time like 2000 to 2015 and see little growth when they start to put more money in to investment late in the game . .
so the longer you give yourself the less time frame dependent market investments become .
so channeling extra money in to the house may end up having the income generating ability hurt more than the cost savings in interest .
it really is going to be a personal situation issue but it is not a slam dunk that channeling more money in to the house and saving some interest is a better deal