Genius businessman
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50 is insane possibly adding 3/4 of a million to the loan. Most with 30 year mortgages don’t know if you pay just 2 whole payments extra to the principal only you’ll knock off ten years from the mortgage.
Wait, I don't know this, can you elaborate? If for example, with a 30 year mortgage, say the monthly payment is $1k, and at any point I simply pay $2k directly into the principal, over the course of the entire 30 year loan, I will have reduced 10 years of $1k monthly payments?
It changes the amortization schedule. Depends on the loan amount, years of the loan and interest but it works. Most people don’t know with a car loan that most of the time you can call the loan company and make direct extra payments right to the principal. They won’t put it on your monthly bill but it will be written into the fine print. Most don’t know to look. Pay extra on the principal, knock years off the term. 😃
Good information. I'll try to send whatever I can spare as extra. I looked up a payoff calculator which, for anyone also interested, can help answer specific questions regarding amounts owed and paid.
Anything extra you can pay, always to the principal only on top f the regular payment. 👍😃
At the beginning of the loan, what you're paying off is almost purely just the interest. You're only making a tiny dent in the principal.
So hypothetically, if 95% of your monthly payment is interest (and only 5% to the principal), making an additional month's worth of payment early would shave nearly 20 months off the loan.
Try looking up some mortgage or loan calculators online and playing with the numbers. Check how much different the monthly payment is with 20 year versus 30 year (might not be as different as you would think). If the calculator allows, try checking how much shorter the loan will be if you keep the monthly payment the same but reduce the principal loan amount by a few payments.
Some people are saying that going from a 30 year to a 50 year mortgage only saves around 5% on monthly payments, probably a bad idea.
Looking up what the 20 year monthly payments would be is a great idea! I shall do that, thanks