Is it better to make a one-time mortgage payment or to increase my monthly mortgage payments?

Question

I have a 6% interest-only adjustable rate mortgage through Chase that was originally in the amount of $504,000.00. (Thus, my original monthly payment due was $2420.)

In the past few months, I've made principal reduction payments in the amount of 317,323.69, leaving me with a new principal of $186,676.31. (Thus, my new monthly payment amount is $933.38)

So my question is: am I better off making another one-time principal payment in the amount of $50,000, or should I increase my monthly "fixed additional principal payment" by $2000?

Thanks so much for your help!!!

Answer 1

Beings it is an interest only loan- you are being charged interest on the loan amount.  So paying a large sum would reduce your interest amount right now, instead of paying a little down at a time and getting charged all that extra interest over that period of time.  Pay the $50,000