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paying extra principal on mortgage

Old 05-19-2010, 05:12 PM
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i have been paying extra money each month on my mortgage. all different amounts each time i do it. ranges from a couple of hundred to a couple of thousand. how do i know that the bank is applying it the right way. it seems that a couple years ago it made a larger difference in the following month as far as the interest. any programs out there where i could double check and see if they are doing it the right way?
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Old 05-19-2010, 05:20 PM
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http://www.hughchou.org/calc/
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Old 05-19-2010, 05:35 PM
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Cool site..thanks Brett!
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Old 05-19-2010, 05:42 PM
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I made the mistake of paying extra online a couple times before realize I had just paid three months in advance. I now go to the branch and make a check to principle. Should be out of my 15yr in 8, saving lotsa gas money in interest.
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Old 05-19-2010, 06:50 PM
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Be careful with trying to pay off principal too early....once it's in the bank's hands it's out of yours. With the economic climate, be certain you have a security blanket just in case you business or job turns south. If you end up that S#!t creek and can't make that payment, the bank accelerates the note on your loan and it's all due. Then it doesn't matter how much principal you paid early, because you could be SOL when the bank wants the next payment.

Also, check with a financial advisor as it may be possible to do more with the extra money that you are putting towards principal. It can be invested in secure investment vehicles and you can have the added benefit of liquidity for when an uh-oh moment arises.

Not making a judgment for your particular situation, because everyone's is different. But like many things in life, advice that suits one's needs doesn't necessarily fit another's, as there are good times/reasons to do what you're doing and you probably have a good strategy to fit your needs.
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Old 05-19-2010, 07:00 PM
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My accountant told me anymore than 2 extra payments a year will hurt me with income tax.
Don't know much about it other than that.
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Old 05-20-2010, 03:39 AM
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Originally Posted by Brett1 View Post
I have used that excellent site for years. He is a great guy.
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Old 05-20-2010, 03:54 AM
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Originally Posted by Brett1 View Post
Great resource. Thanks Brett!

To the OP - Ask the mortgage company for a transcript of your account activity. This will show how they applied the payments. I was making additional principal payments until my adjustable mortgage went to 3.125% in April. Now I make the additional payment to a short term bond fund. If the economy stays in the dumps, rates should stay low and I'd have easier access to the capital if needed.
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Old 05-20-2010, 03:06 PM
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also a good financial calculator link:

http://www.dinkytown.net/
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Old 05-20-2010, 06:20 PM
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going to call lender and ask for a printout. the job is pretty secure and not too concerned about any drastic changes. im paying 6.125% on the mortgage and i don't have enough left to refinance and pay closing costs. i tried to get lender to modify loan but they told me no without closing costs so i figured i would beat them out of some interest by paying it off early. i hope to finish it by end of year which will save me 12 years off original 30 year loan. it will free up some cash each month so i can get back to my plan of buying a lot for retirement. also starting to get 2footitus but thats going to have to wait 5 more years
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Old 05-21-2010, 10:26 PM
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I crunched the numbers years ago on this. Assuming a loan of 100K at 8%, if you toss an extra 100 dollars in each month you'll basically cut your mortgage pay off in half. Especially effective if you pay extra at the beginning of the mortgage.
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