Lower My Mortgage Payment
I have got an wonder that: Can mortgage prepayment reduce minimum payment?
If you prepay principle on a mortgage, will the bank reduce your
minimum "principle + interest" payment or is the only benefit that you
pay off your lown faster and potentially eliminate PMI payments.
Can anyone help me or share me some of your suggestions/view???
I learned the hard way that extra mortgage payments are the dumbest
thing you can do. While they reduce your principal, they do not
change the amount of interest you owe on each payment because that
amortization schedule is created at the beginning of the loan. Thus,
my extra payments just went into the bank's coffers. I received no
economic benefit from that money. Now I set aside the extra mortgage
principal payment in a savings account where it earns 2% interest and
is always available to me. In six years, I will have enough aside to
pay off the balance of my mortgage. I can then decide whether I want
to pay off the mortgage or not. In the meantime, I have full access
to this money and it is earning me interest income. I could kick
myself for not realizing the stupidity of paying extra mortgage
payments to the bank sooner.