On Mar 18, 5:12 pm, Mike <m...@[EMAIL PROTECTED]
> wrote:
> Hello, I have a question regarding early payoff of mortgages, and the
> payments.
>
> If I have a mortgage (110k) and monthly computed interest and
> principle payments are
> (briefly) shown on this amortization schedule..
>
> Due Date Int. Princ. Def.Int.
> Pr-Def Int Outstanding
> 4/01/2008 $610.36 $102.02 $0.00
> $110,453.33 $110,453.33
> 05/01/2008 $609.79 $102.59 $0.00
> $110,350.74 $110,350.74
> 06/01/2008 $609.23 $103.15 $0.00
> $110,247.59 $110,247.59
> 07/01/2008 $608.66 $103.72 $0.00
> $110,143.87 $110,143.87
> 08/01/2008 $608.09 $104.29 $0.00
> $110,039.58 $110,039.58
> 09/01/2008 $607.51 $104.87 $0.00
> $109,934.71 $109,934.71
> 10/01/2008 $606.93 $105.45 $0.00
> $109,829.26 $109,829.26
> 11/01/2008 $606.35 $106.03 $0.00
> $109,723.23 $109,723.23
> 12/01/2008 $605.76 $106.62 $0.00
> $109,616.61 $109,616.61
>
> If on 4/01 I were to pay the $610.36 + 102.02 (int and principle due)
> PLUS make an
> additional principle-only payment of 624.07 (sum total of 05/08 up to
> and including 10/08 principle
> payments), doesn't this effectively knock 6 months off my mortgage and
> accelerate this
> amortization schedule so that I am pretty much, on 05/08, making the
> payment that I would
> have made on 11/08?
>
> Am I reading this right, that I can knock six months off my mortgage
> right now for $624?
>
> Thanks for any help,
> Mike
Yes it isd that simple. If you pay "next months principal" you will
pay off mortgage in 15 years, not 30 (or in half the time).
If you want to accelerate even further, pay the principal amount on
the last payment (so if 30 year fixed, make principal payment on
payment 360 with month 1, 359 with month 2, 358 with month 3...
If you invest the extra payment, you will often come ahead "net worth"
wise, assuming a little more risk (than paying off mortgage early)
with more liquidity as a significant benefit to taking on that risk
and more net worth as the most common benefit of taking on that risk.
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