Comments on: Accelerating Mortgage Payment Schedule

By: MyMoneyBlog

MyMoneyBlog — Mon, 07 Nov 2005 08:53:59 +0000

Carnival of Debt Reduction #8

Welcome to the 8th edition of the Carnival of Debt Reduction, which is a weekly smorgasborg of the best debt reduction articles as submitted from bloggers. While I don’t talk about debt reduction very much, I would suggest that they key is first to fi…

By: jim

jim — Mon, 07 Nov 2005 04:24:36 +0000

Rick,
You specify that it all goes towards the principal because the default is that the payment goes towards your next payment. So if you were to send them your payment on September 1st, it applies to your September 1st payment. If you send them a payment on September 15th, you have to specify that it’s all going to principal or some companies will just apply it as your Oct. 1st payment. That’s the difference…

By: Rick

Rick — Mon, 07 Nov 2005 03:29:22 +0000

>> Why would you want to prepay interest?

>You wouldn’t.

OK, that is what I thought…but it kind of sounded like there might be some good tax reason to do it. I always wondered why I had to choose to tell my mortgage company that any extra money goes towards the principal…I figured that maybe some people put it towards the interest for some reason. Thanks.
-Rick

By: fivecentnickel.com

fivecentnickel.com — Sun, 06 Nov 2005 18:06:28 +0000

Rick said:

> what are the pros/cons of putting this all towards the principal or all towards the interest.

The con is that you’d be throwing money away. The pro is that the bank would really like you.

Jim said:

> Why would you want to prepay interest?

You wouldn’t.

By: thc

thc — Sun, 06 Nov 2005 15:25:53 +0000

There are some good reasons for paying down a mortgage early, but generally it doesn’t make economic sense. Even at 7 1/2%, your net cost of borrowing (after taxes) is probably below 5% depending upon your fed and state tax rates. Add to that the leveraging benefits of buying an appreciating asset with someone else’s money. But if it makes to sleep better, by all means…

By: jim

jim — Sat, 05 Nov 2005 22:52:05 +0000

Why would you want to prepay interest?

By: Rick

Rick — Sat, 05 Nov 2005 22:40:32 +0000

This actually made me think of something that I have been wondering for a while that may be an interesting article for some others as well. I just bought a new house and have been paying an extra $200 a month towards my mortgage…what are the pros/cons of putting this all towards the principal or all towards the interest. What should I be putting it towards? I never even thought about the tax write-off and always assumed that it was better to put it towards the principal to shave some years off.

Just a thought.
-Rick

By: Bruce the Human Pet

Bruce the Human Pet — Sat, 05 Nov 2005 15:09:45 +0000

I apologize for the off-topic comment.

Please contact me as soon as possible. I cannot reach you via EMAIL. and all the submissions to the Carnival of Personal Finance are bouncing because the bargaineering.com POP server says there’s something wrong with our IP address.