What are the benefits of putting more money toward the principal of your mortage?

Question

trying to lower house note and having more equity.

Answer 1

will decrese the amount of principal that your interst rate is calculated on. so you will pay it off sooner

Answer 2

should you be unlucky enough to need means-tested benefits, you won't be expected to spend that first

Answer 3

Well, people disagree on the issue of whether or not that's a good idea. It really depends on what else you are going to do, or have going on at the same time. Some would say a mortgage is "good debt" and should be held on to for as long as possible assuming a low interest rate. So, if you could pay your regular mortgage and at the same time be saving money on the side for retirement at a decent rate, you could possibly hurt yourself by NOT saving money because you are paying extra on your mortgage. Others would say it's always best to get rid of debt. But if you do decide to pay extra on your mortgage, make sure the bank or finance company is actually applying any additional money paid to the principal of the loan.  

Answer 4

This is ALWAYS a good idea - if you can afford to make higher than your minimum required payment, do so.

Go to this website:

http://www.bankrate.com/brm/popcalc2.asp

From here you can input all of the info regarding your current situation, and include additional payments on top of your minimum to see the effect it will have on: 1) the total amount of principal and interest paid 2) the amount of time (and therefore number of payments) you can save by paying more each month

Also, depending on your state, it could mean a larger tax deduction at the end of the year based upon the interest paid on your mortgage.

Make sure, that your additional payment goes directly towards premium, and is not credited towards the interest that will be accruing.  

Answer 5

Consult your mortgage company or find a mortgage calculator that will tell you some things

1)  how much faster your extra money will pay off your house  

2) how much money you will save by putting a chunk down or adding to your monthly payment.

Get the facts and then you will know the real answer to your question.

Answer 6

There are two main benefits:

1.  You will save money.  By lowering the principal you will reduce the total amount of interest you pay for your mortgage.

2.  You will pay it off sooner.  By paying extra on your mortgage, you can pay it off early.  This will increase the amount of equity you have in your home.  

As a side note, many people will tell you that you shouldn't pay off your mortgage early for the tax benefits.  Anybody that tells you this cannot do simple math.  It's always better to get rid of that debt and not keep it around for a supposed tax break.