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If I pay $500 more per month on my mortgage, does that apply to principal only.

If I take a 10 year mortgage at approx $1000/month. I pay $500 extra per month. Will the additional $500 I pay apply to principal only.
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December 01 2009 - Broomfield
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Profile picture for lifebeyondEarth
Ataw,

You must make sure that it is written extra principal. Else mortgage company don't apply it towards your principal, but interest and and I have heard stories that they applied the extra amount to future interest.

Thus, make sure you have clear instructions for EP. I think the best is one time payment at the year end - its actually works better than monthly stuff... and less hessle.
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December 02 2009
it should be applied to principal, i always send two different checks, in the note section i write "for principal reduction".  you should also ask your servicer if they allows a bi-monthly payment that will excell the payoff as well. if you have any other debts, i would first tackle those since they are not considered tax deductible.
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December 01 2009
Yes!  As long as you check the box asking for it to be applied to the principle.

Lynne Wright - Home Real Estate

You may want to check after application, to make sure they did it that way!
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December 01 2009
When doing this, it's also best to issue to separate checks.
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December 01 2009
If you tell them to apply it to principal only.
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December 01 2009
 
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