What happens if I make large payments to principle?

Be careful. Many notes have provisions in them that only allow you to pre-pay not more than 20% of the original balance in any one year. Assuming your note does not have that provision, then this is what happens to your payment schedule. Your payments remain at the same level they were prior to the principal reduction. What does change is that because the principal balance is now $30,000 lower, the amount of interest the bank earns each much is significantly reduced. This means that more of each payment will go towards principal than before and your loan will be paid off that much faster. Some loans allow for a "re-amortization" of the loan that can reduce your payment. If this is what you are looking to do, either read your note or ask your current loan servicer. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ Licensed in California and Arizona ~ www.LoansA2z.com 888-889-9950

Nothing would happen except that you would owe less on your mortgage balance and you would be on your way to paying off your mortgage sooner and saving thousands in interest. Your payment would not change at all ....

Good Morning! A noted already, your principal balance would be reduced and the number of payments you will make to pay off your loan will be cut down. The payments will still remain the same each month, but more will be applied to principal than with the previous payments you were making.

The term of your mortgage is reduced, but I have heard times where bank that holds your mortgage will lower the monthly payment and leave the term alone. I would recomend that you call them and discuss with them what they will do for you. One thing that will not change is the intrest rate.

Look at your amortization schedule and find your current balance. It should be on the line for the # of payments you've made so far. Beginning with the next payment start adding the principal portions of future payments until you get to an amount that's close to $30,000. These are the payments you will eliminate from your mortgage. You will still continue to make payments each month but you have propelled yourself several years through the schedule. Because of this a larger portion of your regular monthly payment will go towards principal. If you don't have an amortization schedule I'll be glad to send you one. Just send me a message.

You can recast your loan for a small fee. Your new payment would be lower as it would be based off of $95,000 at 5.500% interest for the balance of time remaining on your loan 27 or 28 years. Call me Carmel Financial 909-466-9818. NMLS#351733

Great Question. On a fixed rate mortgage, the payment remains the same and the term shortens. If you had an adjustable mortgage, it is reamaortized each change period. The term remains constant but the payment changes. If you are making a substantial principal reduction, prior to, contact your mortgage servicer and see if they would reamortize your mortgage to accomplish what the Adjustable Rate Mortgage would do as discribed above if that is your goal. Some servicers will reamortize, They are not required to but some will.Good luck

Paying a large payment will be a great way to reduce your principle and save on the overall interest you will pay over the term of your loan!!:) Less Principle = Less Interest...win-win!:)Your payments will stay the same amount as they are, and the good thing about this is more will be applied to the principle than the interest each month!:) The only way to lower you payment would be to do a refinance and bring the $30K to closing to reduce your loan amount that way thus a lower payment. Keeping your same loan and putting more money down will lower your principle, but won't lower your payments!:)

I agree with those who say that unless you specifically make arrangements with your current loan servicer (where you make the payment) making a large principal payment only shortens how long you have left on the loan. If that is your preference, all you need to do is make sure the payment is applied to the principal. Many if not most servicers will re-amortize your loan (sometimes there is a small fee) which would drop your payment roughly $150/month but you could continue to pay for the remaining term of the mortgage - unless you make additional payments on the principal before the end of the mortgage.

I guess you have your answer by now..... but i have a suggestion...use the $30,000 and buy an investment property for yourself.there are many good deals out there and you can take advantage of them. You get a tax shelter and also get extra income.Good luck...charlie