How can I get more on my principal every month?

Saltman · Joined: 28 Jul 2005 Posts: 1

Hi guys,

I just refianced to a 15 year mortgage. I was sick of paying a 30 year watching that little amount go on the principal. Is there any tricks that I can do to get more on the principal every month?

I appreciate your response

chow · Posted: Thu Jul 28, 2005 7:08 pm Post subject:

Mortgage Loans are simple interest loans.

Let's look at a 15 yr note at $100,000.00 at 6%.

payment is: $844. (rounded up)

If you made a $1000 payment on that note-you would end up paying off the loan in 11.5 years. If you kept the payments for 15 years- your total of payments would be: $151,000. so you would pay $51,000 in interest. If you paid it off in 11.5 years- you would lower the rate to a whopping 5.9%, but your total of payments is: $142,000.

If you can find $150.00 dollars a month-look at what you just gained in equity? Saved in interest-and there's some nest egg money in case you need to go back to school, or bail out the grand kid who needs school, or you just want to cash in the farm and go live in camper and spend all of your money.

But, if you don't have a mortgage payment, and interest on the 1099-then you may lose that little tax break. (You need to hide money in a retirement plan--but that's a finacial advisor issue, and I'm not a series licensed person-I have enough problems just keeping up with my 72 yr old mother's investment brain)

If you leave the terms of the note on a message here-and what you can afford to pay extra-many of us can give you the term of your pay off. As long as you don't have a repayment or a rider to your note and mortgage stating you can not pay more than a percentage-per year on the repayment. Look at your closing package, you should have a copy of the note and mortgage, and any rider's attached. If there is no prepayment rider, or mention of in your mortgage-then pay the puppy down! It's your nest egg. Emergency money. With good credit, you can walk into our office one day, and 10 days later get a secured loan again.

Haplo · Joined: 20 Jan 2005 Posts: 2422 Location: Springfield, IL

The sad thing is that it may have made more sense for you to keep your 30 year loan and simply pay the difference. Depending of course on how long you had the 30 year loan, and what rate you were at and what you refinanced to. The difference that you have now in payment could have been directly applied to the principle, and that would have accomplished most likely a great deal *more* towards the principle balance than your refinance into a 15 year.

However now you have a 15 year loan, and just as Chow said, it's just being disciplined about making that 'extra payment' each month in order to pay your principle down. Keep in mind you're taking payments off the end of the loan, not actually lowering your monthly payment.

dsickler · Posted: Thu Aug 04, 2005 10:48 pm Post subject:

Haplo wrote: The sad thing is that it may have made more sense for you to keep your 30 year loan and simply pay the difference. Depending of course on how long you had the 30 year loan, and what rate you were at and what you refinanced to. The difference that you have now in payment could have been directly applied to the principle, and that would have accomplished most likely a great deal *more* towards the principle balance than your refinance into a 15 year.

However now you have a 15 year loan, and just as Chow said, it's just being disciplined about making that 'extra payment' each month in order to pay your principle down. Keep in mind you're taking payments off the end of the loan, not actually lowering your monthly payment.

I couldn't have said it better my self.

chow · Posted: Fri Aug 05, 2005 5:48 pm Post subject:

Haplo is right-depending on your income and value/mortgage.

Losing that tax deduction did hurt. My computer and bean counter brain aches about every quarter.