Hello Ginger the short answer to your question is YES for sure. That being said there are a few things to remember. If you have debts currently that are at a higher interest rate than your mortgage you should pay those off first. The higher the interest rate the higher priority to pay it off. It makes sense that each month it is costing you more to carry a debt with a higher interest rate than one with a lower interest rate. Once these are taken care of then your mortgage should be next priority. A mortgage at 5% interest rate paid off over 30 years will cost you about double the original starting balance in interest payments. That is something the banks just don`t tell you. If they did most people would wait till they had more down payment to minimize the overall costs. Any money you put towards your mortgage will go to principal and each extra payment will reduce the time it will take you to pay off your mortgage. Imagine eventually not having a mortgage payment due each month.... Then you can start putting that money to good use, like living or saving for retirement. I hope this answers your question. I would be happy to answer any questions for you or any reader on this or another topic, give me a call any time: Abraham Niyazi - Mortgage Agent - Lic#M08010640 - Centum One FInancial Corp - Lic 10758. Cell: 416-993-4082 Toll Free: 1-866-728-3708 x 115 www.centum.ca/abraham_niyazi/ I deal with 25 Banks/lenders and can do mortgages across Canada except Quebec.

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I am planning on paying down my mortgage early. am i better off making an extra $500 principal payment or making an additional regular payment every other month? it seems that i pay more interest when i make extra payments, which helps on the taxes - but wondered what it would look like after a few years.

Apply it to the principal. Would you rather save a few thousand off of your AGI (reducing taxes by only a few hundred), or have tens of thousands more dollars in your pocket? Even if you decide to move, paying down the principal gets you more equity in your home so you can take a bigger portion of the selling price. Just because you can write off the taxes on your mortgage, does that really mean having one is better?

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I have heard that paying a one time yearly extra mortgage payment will eliminate my mortgage quicker than if i spread the same amount on prinicpal over 12 months? does it matter which way i do it so long as by the end of the year i make the equivalent of one extra payment?

Well, the earlier you make the extra payment, the earlier your mortgage will be paid off. So if you decide to make an extra payment in 2009 and you have to chose between making it over the months in 2009 and at the end of 2009, the former will shorten your mortgage more than the latter.

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I've heard that if i have a 30 year mortgage, making the extra payment can take close to 10 years off the mortgage.

Yes, because that full payment goes 100% toward principal. None of it goes toward escrow or interest. The faster you can pull your principal balance down, the less interest you pay and the faster it is paid off.

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I have read alot about how making 1 extra mortgage payment a month will save you money and get your mortgage paid off quicker. will it also lower payments for the next year and if so, by how much?

It is a great move for you to make extra payment on the mortgage and this is what my husband is doing. It helps to pay off the principle a little bit at a time and it can cut down your future payment period although it DOES NOT lower the payment for the following years. But certainly, you can pay off your mortgage much earlier. One last tip is to use a separate check and label the check as extra payment when you send them in to prevent the mistake of the bank using it as the next month mortgage. Good things going, good luck!

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I keep getting mail that tells me if i can add 1 extra mortgage payment a year that it will reduce my 15 year mortgage down to almost half. has anyone ever heard of this. i'm wondering if this is possible.

Are they trying to sign you up for payment every two weeks program for just a small set up fee of about $300 or $400? Extra money applied to your principal will reduce the mortgage term but you don't have to set up the every two week thing, nor pay anyone for the privilege You can add even $10 to your monthly payment, earmarked as principal and that will reduce your mortgage term.

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I have over a $500,00 loan for a condo in los angeles 5.375% interest rate - place is worth about $670,000 and i have about $145,000 in equity - other than this loan i am debt free - should i make extra mortgage payments or take advantage of the tax advantage and invest the extra $$ in the market? - i plan on staying in my place over 5 years. thanks

A little of both. Diversify. Best of luck!

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This question is for all those folks that don't know too much about mortgage loans. is it true that the best time to pay extra on mortgage loans are at the beginning years of a mortgage loan? that way an individual can beat the bank on the interest. please give me your thoughts on this. thank you.

the beginning of the 12month period....if your 1st payment was june....then you need to pay in may over every year. if you pay earlier...then you can cut more time off the term. you can also do biweekly payments

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I am tring to sell my house. if i make an extra house payment on 12/31/08, will that benefit me?

If not selling your house, the benefit is years of saved interest expense. If selling, don't do it. Keep your free cash in case things don't go exactly as planned - if the money is left over, put it down on the new house.

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This happens with sallie mae student loan payments and it happened with my car payment. if i sent extra money then the next due date was advanced by a few months. if the car payment was 300 a month then 1500 would advance the next due date by 5 months. do home mortgages work this way?

Yes they do, but that is the fool's way of doing it. The smarter way would be to make your current payment then ask to have the extra payment applied to the principle , not the future payment. Unless of course you prefer to pay thousands extra in interest and carry the loan for the full 30 years.

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I have an 80/20 mortgage. the second mortgage is at 12.5 % (tell me about it) i wanted to know what the best way to apply extra funds to this acct would be, to principal only, escrow, what? is an extra payment to the principal better than paying it biweekly (on my own accord). i plan to refinance in about a year. please advise!

Assuming you have nothing elsewhere at a higher rate, applying extra payments to principal will pay you 12.5% guaranteed return. Furthermore, since your "normal" principal payments are small, paying an extra payment could do the work of six, twelve, or even more regular monthly payments, and future payments you make will pay the principal down more than they would have. Payments to escrow are a waste. Making your next payment early just gives the bank your money before it is due. Pay to principal! PS the lower your total balance when you go to refinance, the better your terms might be.