Financial Question

[vern3]

What is a good amount to pay over every month on a home loan, on the principal?
THanks in advance.

[duckter]

My home is financed at 30 year fixed. I asked the lender what my payments would be at 20 year and have chosen to pay additional that per month. In essence, I am on a 20 year payoff plan - but if times were to get tight, I could opt back to the 30 year rate. Also, look at 15 year payments to consider the difference.

Obviously, the more you can pay every month, the better.

For many of you 20 and 30 year olds, I highly recommend a book entitled, "The Wealthy Barber."

[McClintock]

What is a good amount to pay over every month on a home loan, on the principal?
THanks in advance.

Dude,

It's simple interest. The longer you pay on it, the less the outstanding principle will be and the less you pay in interest - - so your principle payment will increase each month. So we really can't answer that question. However, especially if you are early in the loan period, paying a small amount 'extra to principle' if possible will help exponentially in the long run. (And, of course, the more 'extra' you can pay, the better) I calculated this out to a friend of mine one time using simply $5 per month for the life of the loan, and won a bar bet. Basically, it came out to $5 per month for 30 years = $1,800 reduction in principle. However, at the time of his loan, mortgage interest rates were a lot higher than they are now, and I showed him a total savings that would pay for a new car - - - a cadilac with all of the buttons. He was impressed. I won the bet. he bought me a beer.

[Deagle]

$100

[cwink]

Take your monthly house payment.. Divide it by 12 and add that to the total each month.. In essense your making 1 additional payment per year and in most cases will turn a 30 year note into about 17.

[Bankermane]

You need a pro to answer?

here is a link to figure your own amortization schedule. Just plug in the blanks and you will find your answer. Click on view amortization schedule.
http://ray.met.fsu.edu/~bret/amortize.html

[MemphisStockBroker]

$100

[mtmilste]

Depending on what finance rate you got when you bought the house, it may be cheeper to refinance right now. I was going to have to pay about $430 more on top of my current 30 year mortgage to pay it off in 15 years. My rate was 6.375%. I refinanced at 4.875% 3 weeks ago and I'm paying $260 more a month for a 15 year mortgage. Saving $203,000 on intrest for those 15 years. I would check into the current finance rates and look at refinancing.

[Kenny Boone]

mtmilste or anybody,

If you don't mind me asking where or who do i need to talk to to get a 4.875% rate. What's the going rate, I need to refinance.

[CBRADGO]

We financed a 30 yr fixed with First Tennessee and got them to do a payday draft. We get paid every two weeks, so that's 26 payments a year, or 13 "monthly" payments. The extra "payment" per year goes to principal and our house should be paid off in almost half the time...

[the doctor]

one extra payment a year can reduce the life of your mtg by @ 1/3

30 yr mtg + one extra monthly payment a year = @ 21 year mtg term

so pay it all at once or divide by twelve as mentioned above

the doc

[MemphisStockBroker]

30 year fixed is 5.6%

[Drake]

It is actually a pretty complicated question that you asked - one that doesn't have a carte blanc answer. Before you pay any additional principal, I would recommend that anyone have approximately 6 months of living expenses in an emergency fund (liquid funds, not stocks or something hard to get your money out of). Then, I would ask what your monthly disposable income is. Do you have any other debt such as a car or credit cards? If so, I would pay those off first because mortgage interest is tax deductible. Also, what are your investment goals? In other words, what are you going to need the money for in the future? Are you going to have to buy a new car in the short-term future? Some people will disagree with me in this next statement, but if you do the math the proof is in the numbers. It is better to pay off your house sooner than to stick all your money in retirement funds and pay the minimum monthly payment - especially since the interest you are saving is guaranteed instead of a "gamble" in the stock market (especially with the current instability). Now, back to your initial question. How much extra? I would put about 75-80% of your disposable income toward additional principal(but that % may vary depending on your actual amount of disposable income). Why not 100%? There are always unexpected expenses that come up, and I don't want to use up my emergency fund unless it is an emergency! Probably more of an answer than you wanted, but just my 10 cents worth - I guess my conservative approach is the CPA coming out in me.