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.
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