This week we answer another listener question; "How does one know if they're paying just interest or they're paying down principal? Would their mortgage payment be just the interest or would it be substantially more? Who decides what gets applied to the mortgage payment once the
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interest has been calculated and figured out by the lender?
Mortgage loan payment schedules are based upon a formula that is heavily favored toward paying interest. Very little principal is paid during the first 10 years or so of a loan. An old rule of thumb is if you make 1 extra mortgage payment per year you will decrease your loan term by 8-9 years on a 30 year fixed rate loan. Try for yourself with the link below or email us and we'll help you out.
Listen to "Pay off Your Mortgage Faster"
If you have any questions you would like us to answer on our show, please call our listener line at 714-519-7833 or email mortgagepodcast@gmail.com.
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