How does making an extra say $1000 towards mortgage principal affect the mortgage? For example if I pay an extra $1000 on the 15th, would that reduce the amount of interest I pay next month since my mortgage balance is reduced by $1000? Do I just look at the amort schedule to see what the effect it?
Pls advise thanks
pls offer ur advice thank you
When I did this on my primary home 20 years ago I would simply look at the amortization schedule, and pay the next principle payment. That basically eliminates that payment and you save that payment's interest. So, if I pay payment #1 PLUS principle #2, my next payment would be payment #3 PLUS principle #4. I have then saved the interest # 2 and #4.
Your payment the next month stays the same but less of that payment will be interest because the outstanding balance is reduced.
You could look at an amortization schedule our just look at your next mortgage statement. Mine show how much of the last payment was principal and how much was interest and also what those value are for the next payment. You should be able to compare to see what impact your extra payment made.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing