If a person has a mortgage loan when is the best time to pay extra on the mortgage?

This question is for all those folks that don't know too much about mortgage loans. Is it true that the best time to pay extra on mortgage loans are at the beginning years of a mortgage loan? That way an individual can beat the bank on the interest. Please give me your thoughts on this. Thank you.If a person has a mortgage loan when is the best time to pay extra on the mortgage?
the beginning of the 12month period....if your 1st payment was june....then you need to pay in may over every year.


if you pay earlier...then you can cut more time off the term.





you can also do biweekly paymentsIf a person has a mortgage loan when is the best time to pay extra on the mortgage?
As I am a first time buyer, I have limited knowledge on the topic but this is what I know. The interest is based on the principle of the loan balance. As soon as the principle lowers, so will the interest, until both are zero. So in your case, you should be paying as much toward your mortgage as possible pure month. you will not be able to exscape the interest but you will be able to lower the principle loan balance, which will lower the monthly interest.
You can't really ';beat the bank';. No matter when you pay extra, you are always paying interest on the amount of money still unpaid on the loan. However, the IMPACT of paying extra, when looked at over the entire loan duration, is greatest in the early years of the mortgage.





For example, let's say your first mortgage payment is $1100, and $135 of that is principal. That means your first monthly payment reduces your remaining loan amount by $135. Each month a little more of your payment will go towards principal. Now if you pay an extra $135 in the first month, you will effectively removed one whole month from the end of the mortgage. That's what you can see from looking at an amortization schedule - how much of each payment is going towards principal.





You always reduce the length of your mortgage by paying ahead, but it has a greater impact earlier in the mortgage because the amount of principal in each payment is smaller, and all of the extra goes towards principal.





Of course you don't have to pay any particular amount extra.





I should also mention that in the vast majority of mortgages, your payment is credited against your loan on the first of each month, so you do not benefit from paying it any earlier WITHIN the month. To benefit from paying bi-weekly, your mortgage has to be structured that way. Most are not.
Why not pay extra with every payment? Here is an example: Pretend your monthly payment is $600. Then pay $700 per month and you'll end up paying two extra house payments per year. Inform your lender that the additional money should be apply to your principal. The quicker you pay down your principal the less interest you will end up paying. By making two to three extra payments per year, you will save yourself a several years of not paying any mortgage payments.
Yes, paying extra on the principal at the beginning of the loan will cut down on the interest dramatically. Google ';amortization schedule'; and find a calculator to work out your numbers. You can really save yourself lots of money by paying ahead.
Yes, the earlier you pay off the principal (where your extra payments would go) on a loan, the more you will eventually save in interest payments.





However, if you don't plan on living in your house for the majority of the length of your loan, AND if you have a low interest rate on your loan, and you think you can do better in investing, you may not want to make early payments.





For example, let's say one year you decide to make an extra $5k in mortgage payments and your rate is 6%. Yes, that means that you won't be paying interest on that $5k in your mortgage, but if you could take that $5k and make 10% on it in investments each year, you're better off not making those payments.





The hard-and-fast rule that it's ALWAYS better to pay down your mortgage was made at a time when mortgage rates were much higher and chances were that you couldn't do better in investing than your mortgage rate. This is just not true with everyone now.