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Reply to "Paying Extra Principal on Mortgage"
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[quote=Anonymous][quote=Anonymous][b]Mortgage interest is front loaded. When you pre-pay, they put the payment towards the last payment in the amortization schedule, which includes very little interest.[/b] You'll pay it off earlier, but Pre paying a mortgage effectively drives up the interest rate you are paying.[/quote] This is not true unless you have a terrible mortgage. Most let you apply extra to principal. The interest is not "front-loaded," rather interest is charged on the remaining mortgage balance so the interest paid dwindles over time. But the rate is the same. All that said, OP I agree with PP who said prepaying a 4.5% mortgage should be well down your list of priorities with that extra $1k. I-bonds are paying almost 10% right now.[/quote]
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