Posted on: 21st Jul, 2010 03:06 pm
which way saves me more money when paying extra money to each monthy mortgage payment: A) to apply additional payments to principle or B) allow the lender to apply them to future payments?
I am not familiar with how a lender applies extra money paid to future payments.
Logic would tell me applying to extra principal now saves you more money. Once you pay the principal, you do not owe interest on that principal anymore. If applied to future payments (whatever that means) you have not paid any extra principal today and still owe the interest on that principal.
Logic would tell me applying to extra principal now saves you more money. Once you pay the principal, you do not owe interest on that principal anymore. If applied to future payments (whatever that means) you have not paid any extra principal today and still owe the interest on that principal.