From: mad hatterŪ
Newsgroups: misc.consumers.house
Subject: Re: Extra principal won't reduce mortgage payments  --> yes they will in most loans
Date: Tue, 31 Jan 2006 06:14:16 -0600

On Mon, 30 Jan 2006 22:08:38 -0600, "John A. Weeks III"
 wrote:

>In article , mad hatter? 
>wrote:
>
>> Wrong for most loans except yours perhaps.  Let me say it differently.
>> On any fixed loan amount, extra principal payments will reduce the
>> number of payments based on the length of the "original" loan (normal
>> amortization is monthly).   Of course if a loan is of only one month
>> duration, then I agree with you based on the mathematics. 
>
>That may have been true in the old days.  But today, more an
>more mortgage companies are offering flex payments where
>you can choose, on a month to month basis, to pay as a 30
>year, 15 year, or even as an interest only loan.  I have
>even seen loan programs where you can pay some amount that
>is less than the interest, and do negative amortization.
>In these cases, the loan payment is recomputed each and
>every month.
>
>-john-


John, let me ADD to my last post (before I run) that loan amortization
is such that when you make extra principal payments, you first lower
your principal (loan amount) which in turn lowers the number of
payments (with exceptions noted in my last post).  

One more exception not mentioned in my last post would be if you paid
such a small extra amount that it would lower your loan amount but not
lessen the number of payments but would lower your last payment owed.

So, yes there are exceptions but for most loans, extra principal
payments WILL reduce the number of mortgage payments.