Simple mortgage payment question. Pay more, no interest for that amount?

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Hello, I am a first time homebuyer, and was wondering if the mortgage payment is $ 700 per month for example, and I sent in $ 800, would the extra $ 100 go towards loan alone and not interest? Thanks.

6 Comments
  1. Reply
    KYdeb
    April 30, 2011 at 12:32 am

    It depends on your mortgage company. But on your payment coupon, you should be able to denote the extra hundred is on principal then watch your next statement and it should show the normal principal paid in your regular payment plus the hundred extra.

  2. Reply
    Darryl b
    April 30, 2011 at 12:58 am

    the premium is first paid which is the 700 then the 100 goes against the remaining balance. this will help you out in the long run. 100 does not seem to be tha. much but if you continue to do this you can wind up paying off your property much sooner than you can imaging.

  3. Reply
    Michael T
    April 30, 2011 at 1:27 am

    It will go toward the principle. Use the following loan calculator and put in the loan figures and add $ 100 as an extra monthly payment to see the difference.

    http://www.bankrate.com/calculators/mortgages/loan-calculator.aspx

  4. Reply
    efflandt
    April 30, 2011 at 2:18 am

    Make sure that you get a loan “without” any prepayment penalty. Then anything you pay above your required payments will pay down your principal, ending the loan early, with less payments and less total interest.

    Since initial payments are mostly interest, the earlier in your loan you pay extra principal, the more you benefit.

    But note, that paying extra principal does not allow you to skip or be late with future payments, so make sure you have enough savings for emergencies.

  5. Reply
    OldJimmy
    April 30, 2011 at 3:08 am

    Do not ASSUME that the mortgage company will automatically apply the extra $ 100 to principal; tell them explicitly when you make the extra payment.

    If you don’t they sometimes can just put it in a suspense account and hold it until your next payment comes in, add it to the payment, and put any overage back into the suspense account.

    You won’t lose your money, but you want to make sure they know what you want them to do with it.

  6. Reply
    tex k
    April 30, 2011 at 3:12 am

    It depends what type of mortgage you have a repayment mortgage has has two parts interest and capitol any payment pays the interest charged plus a small amount off the capitol so in time your repayments reduce because your capitol reduces .The change is usually only made once a year or more often if a large shift in interest rates occur.If it is an interest only mortgage then you only make interest payments and you have another policy running at the same time that over the term of the loan will make enough money to repay the mortgage.If you have this type then overpayment’s are pointless unless your mortgage provider allows capitol reductions

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