Mortgage Payment v. Principle

by JoAnn Johnson
(Memphis, TN, Shelby)

Should most of your mortgage payment actually be applied to the principle portion of the loan? I was very surprised to see my monthly statements and how little is being applied to the principle!

===ANSWER===

Hello JoAnn;

Good question!

When you take out a mortgage, what takes place is the lender will do what is called an amortization table. You can do these yourself real easily.

You can play with my mortgage calculators all you want by visiting this link Mortgage Calculators and see for yourself how much of your monthly payment goes on the principal.

I suggest that people try and put an extra $50-$100 a month down on the principal so you can pay off the balance early.

If your mortgage is new, then most of your payment each month goes to pay the interest since the lender bases interest charges on the unpaid balance.

So then, the lower the balance the lower the interest amount you pay.

Use these calculators to see how much you can save if you make small extra principal payments each month.

In the real world, the principal part of our mortgage payment is the smaller amount.

Thanks for asking such a good question.

Regards,

Jeff