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Old 01-27-2012, 08:34 PM   #1
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Is it true....mortgage question

My dad has said for ages that if you pay even a little extra on your mortgage, that it goes directly to the principal and pays it off much faster than that amount does in the actual mortgage amount. IE: every $25 in the payment has a cut taken for interest, whereas every $25 extra has no cut taken. Is this accurate??
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Old 01-27-2012, 08:40 PM   #2
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Any extra onto any loan goes towards the principle.
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Old 01-27-2012, 08:41 PM   #3
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Re: Is it true....mortgage question

Yes. We pay in extra each month (assuming we can). We try to do a few hundred a month. On the mortgage stub that we send in, it has a line for the actual payment and a line for additional principal. Its a good idea if you can afford it (if you can't like when we first got our house, forget it).
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Old 01-27-2012, 08:46 PM   #4
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Re: Is it true....mortgage question

My sister works at the bank and says that one extra payment a year can result in 10 years taken off your mortgage. I also write in the extra on the additional principal line when I go to pay. Once we get our credit cards paid off we intend on attacking the principal like crazy!
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Old 01-27-2012, 08:48 PM   #5
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I pay everything online through my bank, so since ive been sending in a little extra should i assume its going to the principle?
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Old 01-27-2012, 08:51 PM   #6
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Quote:
Originally Posted by Mom2Connor
I pay everything online through my bank, so since ive been sending in a little extra should i assume its going to the principle?
Yes.
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Old 01-28-2012, 05:21 AM   #7
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Re: Is it true....mortgage question

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Originally Posted by Mom2Connor View Post
I pay everything online through my bank, so since ive been sending in a little extra should i assume its going to the principle?
No. I would not make that assumption. Banks do weird things. They might be holding it and then applying it to the next month's payment or something. I'd look at your statements and see what the payments are doing.

Paying more is a great thing to be able to do! We paid off our last house in 2 years, because I was working. This house will be about 10 instead of 15.
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Old 01-28-2012, 06:53 AM   #8
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Re: Is it true....mortgage question

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No. I would not make that assumption. Banks do weird things. They might be holding it and then applying it to the next month's payment or something. I'd look at your statements and see what the payments are doing.

Paying more is a great thing to be able to do! We paid off our last house in 2 years, because I was working. This house will be about 10 instead of 15.
Yup... never assume. A bank is a business, after all, and there is a lot of fine print.

We'll have our house paid in 4 more years, cutting 23 years off the mortgage and saving ourselves~ $150k by not paying them interest over the years.
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Old 01-28-2012, 11:12 AM   #9
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Originally Posted by msuk2girl

Yup... never assume. A bank is a business, after all, and there is a lot of fine print.

We'll have our house paid in 4 more years, cutting 23 years off the mortgage and saving ourselves~ $150k by not paying them interest over the years.
We are almost identical. We are a 25 y mortgage paid in 15 years. We have 4 years left and will save 130k in interest

23 years off your mortgage? What kind of amortization do you have? Here we have 15, 20, and 25 and I think it has been in the past year or so that they made a 30 year term available.

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Old 01-28-2012, 11:45 AM   #10
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Re: Is it true....mortgage question

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We are almost identical. We are a 25 y mortgage paid in 15 years. We have 4 years left and will save 130k in interest

23 years off your mortgage? What kind of amortization do you have? Here we have 15, 20, and 25 and I think it has been in the past year or so that they made a 30 year term available.

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The standard term for a mortgage in the US is 30 years.
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