Home Selling in Killeen>Question Details

Timber333, Home Owner in Killeen, TX

do you think if i get a part time job and pay the interest plus my mortgage payment every month this would decrease the amount owed on my home.?

Asked by Timber333, Killeen, TX Sat Nov 20, 2010

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I am assuming you a are referring to making an extra payment above your regular payment. By doing this consistently you can knock many years off your mortgage. An extra $50/mo can knock 5 years off your mortgage if you keep doing it. Even if you make periodic extra principal payments you will be knocking months and even years off of the end of your mortgage.

You can see for yourself buy using an amortization calculator on many mortgage websites (just google it) and put your loan terms and add $50 or whatever you want to your regular payment (exclude your taxes and insurance if you escrow them and they have nothing to do with the calculation and will mess up your numbers).

Try it and you will be amazed what a little extra money can do over time... it will save you literally thousands of dollars!
1 vote Thank Flag Link Mon Nov 22, 2010
What a great idea. I had a friend once who had a paper route for a couple of years in addition to their regular job and they applied it to their debt. By making only 1 extra payment a year, you can cut 7 years off of a 30 year mortgage. I'd say that 2nd job might be a great way to building wealth,
Web Reference: http://www.treugroup.com
1 vote Thank Flag Link Sat Nov 20, 2010
This question has already been posted and answered back in November.
0 votes Thank Flag Link Sun Jan 2, 2011
Make sure if you are wanting the additional money to go towards the principal. Make sure you mark that on the coupon. That way the lender will know where to apply it to when they get it. It is alway fun to see the principal going down on the loan. At the beginning most is interest. So use that part job to add paying off extra principal each month.
Debby Homestead Realty
http://www.debbyrealtor.com
0 votes Thank Flag Link Sun Jan 2, 2011
Every mortgage payment consists of prinicipal and interest. In the beginning you are paying mainly interest and eventually the balance tips and at the end you are paying mostly principal. When you say you will get a part-time to pay "the interest plus my mortgage" it's not clear what you mean. I assume you mean paying extra than the usual amount to cut down on the interest over the course of the loan. That would be a very good idea, because anything you pay in addition to your normal payments will shorten the life of the loan and the overall amount of interest you pay. Make sure your mortgage has no pre-payment penalty clauses.
0 votes Thank Flag Link Sun Jan 2, 2011
Timber333,

Any time you pay in excess of your minimum required monthly mortgage payment, the extra amount goes directly towards reducuing your prinipal balance (although it doesn't lower your minimum monthly payment). Do you mind sharing your current loan terms?

If your current interest rate is above 5.50% you might want to consider looking to refinane your home loan to save even more money.
0 votes Thank Flag Link Sun Nov 21, 2010
Of course you want to make your payment every month, but if you make extra payments, you want it to go towards principal. You need to check directly with your lender on how to make this happen. Typically you want to make seperate payments and designate them as principal payments. You might also ck to make sure there is no prepayment penalty.
Web Reference: http://www.teamlynn.com
0 votes Thank Flag Link Sat Nov 20, 2010
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
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Timber333,
If you have a conventional mortgage, every penny you pay on your mortgage over your minimum payment is applied directly to the principle. Whether this is the best financial move for you or not depends on many factors. Do you have other debt? Mortgage debt is usually tax deductable, so most advisors would suggest you pay off credit cards, auto loans or other debt before your mortgage.
Do you have a savings account with sufficient reserves set aside in case you get sick or lose your job? Once you apply the additional money to your mortgage, it's gone. If you have several months of savings available and other debt paid off, directing additional funds to your mortgage can be a good idea.
I hope this helps.
0 votes Thank Flag Link Sat Nov 20, 2010
Paying down the principal makes sense in this market. You might also make sure that your current interest rate is close to current market rate. If not, take a look at refinancing. Even though it cost some $$ to do that, you might get it all back plus, because your interest will be lower, and your principal payments larger, even without getting another job.

Below is a link to an excellent mortgage calculator.

Doc Stephens, REALTOR
0 votes Thank Flag Link Sat Nov 20, 2010
You should contact the lender to find out the best way to reduce the balance on your mortgage. By making extra payments towards principal every month you will reduce the amount of interest you pay. But please check with an accountant or financial advisor to find out the best way you can save with regard to the terms of your loan.

Nanci
0 votes Thank Flag Link Sat Nov 20, 2010
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