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This will also give the breakdown of interest paid and principal paid over the life of the loan.
I am concerned that new homeowners are not aware of these details, in that I would hope someone would have explained how it works (realtor or loan rep, etc...). Then again, that's why there are so many problems now, people don't understand what is going on.
it's pretty cool what an extra $500 toward principal can do to the loan. We started doing it this month. I took a snapshot of the last month and loan totals for the loan projection. The first photo shows how the loan would end with the extra $500 per month toward principal (which cut it to a 12 year loan). The second photo shows how the loan would end if we always paid minimum.
it's pretty cool what an extra $500 toward principal can do to the loan. We started doing it this month. I took a snapshot of the last month and loan totals for the loan projection. The first photo shows how the loan would end with the extra $500 per month toward principal (which cut it to a 12 year loan). The second photo shows how the loan would end if we always paid minimum.
Yeah, you will save almost $100k. That's why long term planning can really payoff. It just takes the effort.
don't use that as an excuse not to pay your mortgage. what's your rate now? the drawback of a 30y fixed is that you pay mostly interest from the start. I would suggest as others already mentioned to make an extra payment if you can afford it. The best mortgage would probably be a 30 year fixed interest only that recasts... when you pay toward principle your payment goes down but I wouldn't switch to bi weekly because it could mess you up if you don't pay on time...
Last edited by mortgage king; 09-26-2008 at 12:01 AM..
don't use that as an excuse not to pay your mortgage. what's your rate now? the drawback of a 30y fixed is that you pay mostly interest from the start. I would suggest as others already mentioned to make an extra payment if you can afford it. The best mortgage would probably be a 30 year fixed interest only that recasts... when you pay toward principle your payment goes down but I wouldn't switch to bi weekly because it could mess you up if you don't pay on time...
Of course I won't use that as an excuse not to pay. I see it as purely an extra payment toward principal by my own free will. I still pay my $823 monthly payment in addition to whatever extra payment. I probably won't always pay exactly $500 extra depending on how rich/poor I feel that month.
To tell you the truth, I wish I would have rented and saved more of a down payment. We've been in the place for a year now, and paid about $1000 of the principal down. I think we got a fairly good interest rate of 6.1% fixed. The house isn't worth what we owe. I saw all of my friends and relatives coming away with huge appreciations, selling after they owned for just 3 years. I wanted a piece of the pie. I believed it when realtors told me "good time to buy, good time to buy." I figured that appreciation would make up for anything else. No down payment, financed the entire value of the house, financed closing costs.
Wow, I just figured out I could shave off 5 months on my mortgage by paying extra principal once a year instead of extra every month. The total comes out to the same amount, but I guess it adds up in the end because it's front end loaded. Sure, I could be getting interest on the money. So that needs to be calculated in there as well.
Example:
100/month extra principal.
1200 extra principal in January.
or In my case I would save 1/2 monthly extra principal payment every year if I paid it once/year instead of every month.
My point is, if you have an extra $1200 laying around (lol) and will be paying it anyway over the next twelve months, then it is better to pay it at the beginning of the year.
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amortization
