Jun
20
Which is better for the homeowner? To pay extra on the loan every month or once a year pay a big chunk?
By
Just curious! Which one would be more beneficial to the home owner (buyer)? To pay extra on the principal every month or to pay one large sum at the end of the calendar year?
Quick Property Sale
Purchased with owner occupied mortgage – can it be rented in the future?If a buyer buys a property, puts 10% down, gains the advantages of an owner occupied mortgage as opposed to an investor mortgage, lives in it for 6 months, 1...
Quick Homeowner Loans: Get Money in No TimeA quick homeowner loan is required when one might want to renovate ones home, buy a new car or any other major expenditure including clearing ones old debts. One’s home...
Quick Homeowner Loans for Immediate Monetary ObligationsQuick homeowner loans are secured loans in which one’s home is the security. It is called a quick homeowner loan as it can be borrowed really fast. More often than...
Unsecured Homeowner Loans Uk: Get a Loan Without Keeping your Property at StakeUnsecured Homeowner Loans UK: At a GlanceA person is fortunate if he/she is blessed with a home. In the world today property like home, land or any such belongings are...
Will Marilyn Manson pay off my student loan debt?(I’m just asking. Manson makes tons of money in record deals–I think he could afford my trifle debt. No need to get snipey).Quick House Sale...
Leave a Comment
You must be logged in to post a comment.
5 Comments
August 13th, 2009 at 6:00 am
Frequency of payment. Do a check using your financial calculator, and the frequency of payments wins out in the calculation of total interest.
August 15th, 2009 at 12:30 am
well there was a study in an SFO magazine on this. But do whatever you want as for the paying down on the principal it doesn’t really matter unless you do NOT have an early final payment fee. The study on it showed why just paying the amount on a 30 year fixed is the best route because you know how much money you need each month and you can be better prepared to handle any “suprises” that comes your way.
I agree with their assessment that you should save any “extra” especially since most online banks have a savings of 5% and the average apy on a 30 yr fixed is near 6% (pending on how good your credit is). So a 1% difference isn’t that muuch. I would save and build on teh savings no need to pay it off early.
August 17th, 2009 at 2:36 am
its better to pay even a small amount of money sooner, rather than a large nut at the end of the year. for example a $100 every month rather than $1200 at the end of the year. You arent paying the interest on the first hundred for the next 11 mos. whereas you pay all the interest on that money if you wait ’til years end
August 17th, 2009 at 8:58 am
If you do not have a prepayment penalty clause in your contract it’s probably in your best interest to pay extra on the principal each month. Check your contract closely for a prepayment penalty clause. If you do have one of these clauses in your loan contract you need to contact your attorney and see if there’s a little known law applicable. That law is that if your financial institution is sold to another financial institution then you may renegotiate the terms of your loan.
However, if you do not have a prepayment penalty clause and if you can pay a full principal payment each month you can actually pay off a 30 year mortgage in 15 years!
Even if you can’t pay a full principal payment each month it’s still better to pay your regular payment each month and as much as you can afford toward the principal since you will still pay off thel loan in a shorter time which means that you’ll be paying less total interest.
Check out the figures using a financial calculator such as the one on in the Consumer Information section.
For your convenience I’ve included the direct link to the financial calculators.
Good Luck!
August 20th, 2009 at 9:14 am
Go to Microsoft website below and download the Loan Calculator with Extra Payments and see for yourself. It is an awesome spreadsheet. Complete the top portion and play with the spreadsheet by showing monthly payments. Then elimate the extra monthly payments and enter just a yearly payment under column E on any line below Line 18.