If I make a one-time extra payment on my fixed mortgage, would a 100% of it be applied towards the principal?

Question

If I make a one-time extra payment on my fixed mortgage, would a 100% of it be applied towards the principal?

Answer 1

As long as you specify on the payment coupon or check that the amount is to be applied directly to principal, they have to apply it that way.

Answer 2

Depends on your contract with the bank.  Check the rules.  Usually, in a 30 year fixed mortgage you spend the first 10 years paying the interest up-front.

Answer 3

Make sure you stipulate any excess money sent is to be applied to principal.Otherwise some lenders will return the money at the end of the year as an over payment.

Answer 4

If there is no prepayment on your mortgage AND your payments are current then their should be no problem. Be sure to write on your check not only the account number but also that it is a *principal only* payment. Otherwise, they may not know what to do with it and apply as additional payments or dump into yoiur escrow account for taxes and insurance.