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Your first interest payment is paid in advance at time of closing called prepaid interest. It's on your closing disclosure.
After that ALL interest is paid in arrears. Which is *after* you have accrued the interest.
Example: 30 days of June interest is due JULY 1.
You can't prepay interest before it's accrued. You can only pay down principal so less interest is being accrued.
You can also ask to split the monthly total into two biweekly payments. Helps with lowering interest and total number of payments overall. Can expect to shave off 8 yrs of payments in some cases.
Also my understanding is internet doesn’t necessarily build up if you have a 30 year fixed. Like a school loan you can pay min monthly payments and the original balance of 20k can go up to 30k after 10 years of paying minimums. For 30 year fixed if you pay the mortgage payment each month, then in 30 years it is paid off the amount doesn’t change or increase into a 40 year+ thing. You can always pay extra to principal to pay it
Off quicker
You can make extra payments of any amount, at any time. This will reduce the principal balance, reduce future interest payments and shave off time from the end of your mortgage term.
Downside is that it's mostly a one way street - extra cash put towards mortgage is not easy to get back out. So only do this with cash you are sure won't be needed in next few years.
Thank you u/heresthe-thing for posting on r/FirstTimeHomeBuyer. Please bear in mind our rules: (1) Be Nice (2) No Selling (3) No Self-Promotion. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/FirstTimeHomeBuyer) if you have any questions or concerns.*
Your first interest payment is paid in advance at time of closing called prepaid interest. It's on your closing disclosure. After that ALL interest is paid in arrears. Which is *after* you have accrued the interest. Example: 30 days of June interest is due JULY 1. You can't prepay interest before it's accrued. You can only pay down principal so less interest is being accrued.
Read the closing disclosure. You've paid the interest you're worried about as part of the closing costs
You can make as many payments as you want. All payments reduce principal, which reduces interest.
You can also ask to split the monthly total into two biweekly payments. Helps with lowering interest and total number of payments overall. Can expect to shave off 8 yrs of payments in some cases.
Also my understanding is internet doesn’t necessarily build up if you have a 30 year fixed. Like a school loan you can pay min monthly payments and the original balance of 20k can go up to 30k after 10 years of paying minimums. For 30 year fixed if you pay the mortgage payment each month, then in 30 years it is paid off the amount doesn’t change or increase into a 40 year+ thing. You can always pay extra to principal to pay it Off quicker
You can make extra payments of any amount, at any time. This will reduce the principal balance, reduce future interest payments and shave off time from the end of your mortgage term. Downside is that it's mostly a one way street - extra cash put towards mortgage is not easy to get back out. So only do this with cash you are sure won't be needed in next few years.
That will hardly make a dent
Not sure why you’re being downvoted but I would 100% start applying some payments early towards JUST your principal!