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<p>[QUOTE=&quot;masterswimmer, post: 24896425, member: 102022&quot;]I&#039;m sorry Jersey, there&#039;s just too much misinformation here to not address it.</p><p><br /></p><p>1- Correct, you can specify where the extra payment goes. However, it can only go towards principal or escrow. It cannot be applied to interest. Your mortgage payment is made in arrears. Not in advance. A bank cannot charge you interest upfront. The interest is paid on the outstanding principal balance. So at the end of the month the interest has accrued for the next monthly payment.</p><p><br /></p><p>The ONLY time during a mortgage that you pay interest in advance is at the closing.</p><p><br /></p><p>If you close, for instance, on March 3rd, at closing you&#039;d make an interest only payment for 29 days, from March 3rd thru March 31st. Your next mortgage payment would be due May 1st, 59 days after your closing. The May 1st payment would include principal plus only the interest accrued from April 1st thru April 30th since you already paid the interest for the month of March at closing, on March 3rd.</p><p><br /></p><p>If you close, for instance, on March 30th, at closing you&#039;d make an interest only payment for 2 days, March 30th thru March 31st. Your next mortgage payment would be due the same day as the above example, on May 1st, but only 32 days after your closing. This May 1st payment would include principal plus only the interest accrued from April 1st thru April 30th since you already paid the interest for the month of March at closing on March 30th.</p><p><br /></p><p><br /></p><p><br /></p><p><br /></p><p>The banks do not load any interest up front at all. Zero up front. It definitely seems like it is front loaded only because your principal balance is high. So making your regular monthly mortgage payment, based on a standard 30 year mortgage, applies so much more of your payment to interest than principal at the beginning of the loan, it makes it seem like forever until the principal balance comes down enough to where your monthly payment goes more towards principal than interest.</p><p><br /></p><p>This is why it is so advantageous to add anything you can to your monthly payment and apply it to principal*. Even it you only add an additional $50/month towards principal, that&#039;s $600/year extra. It will shorten the life of your loan.</p><p><br /></p><p><br /></p><p><br /></p><p><br /></p><p>Here&#039;s another piece of misinformation. You cannot pay months ahead on your mortgage. When you make your monthly mortgage payment and you add an extra full payment (for instance, making 2 payments at once), it will not, I repeat, it will not pay your mortgage in advance so you don&#039;t owe the next month when it comes due. The extra payment will be applied to either principal, so long as you direct the bank to apply it as such, or to escrow. It will shorten the maturity date of your original loan, thereby reducing the amount of interest you pay over the life of your mortgage.</p><p><br /></p><p>In case anyone is interested where this information is coming from, I was a mortgage broker before I retired. My advice stands. Pay down your principal faster with extra principal payments monthly. It can save you many thousands of dollars in interest over the course of your mortgage. How many thousands? It all depends how big of a mortgage you started with. How much additional principal you send in monthly, and for how long you stick to this approach.</p><p><br /></p><p>* If you make extra principal payments, as I do recommend, it is extremely important to monitor EVERY SINGLE MONTH that the bank applied the payment to principal, as instructed. I personally have seen the bank misapply MY payment, every April, to escrow, not principal. It seems they had a glitch in their system. It took me about 4 years to see the pattern and have them correct their system. So stay on top of it. They aren&#039;t perfect.[/QUOTE]</p><p><br /></p>

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