Dave Dodson <dave_and_darla@[EMAIL PROTECTED]
> writes:
> On Mar 19, 2:59 pm, dapperdobbs <George...@[EMAIL PROTECTED]
> wrote:
> > I think the lender will recompute your payments, but NOT the length of
> > the mortgage (you would have to refinance into a shorter-term mortgage
> > for that)
>
> Of course it would depend on the particular loan documents, but my
> experience has been that prepaying reduces the term of the mortgage,
> not the monthly payment. So I think you are wrong here.
For the vast majority of fixed-rate mortgages, the monthly payment
is fixed. Prepayments of principal, therefore, do *not* lower
your next payment ("recompute your payments"). But since there
is less principal remaining on the loan, it *does* shorten
the remaining life of the loan.
Some mortgages (mine, in fact) may offer a "recompute" option
whereby (again, in my case, with a fee) to recompute the
monthly payment. If one has, in fact, prepaid a bunch of
principal, such a recomputation would stretch the life of
the loan back out to the original term (rather than the
shortened life the prepayments caused) and thereby lowere
the monthly minimum payments. But that recomputation is
by no means the default action in the event of unscheduled
principal prepayments.
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