I paid like 20k to my mortgage loan, but when I see amortization schedule, they do not show my reduced interest. Is it how it is supposed to be? Edit: I understand my monthly payment doesnt change, but I was under impression that my interest portion of monthly payment will be lower since Principal has decreased. I applied extra payments towards principal and I can see my principal has gone down by the amount I paid.
When your make principal payment, your outstanding principal decreases and thus the portion of interest in your monthly payment decreases. Do you don’t see it? What type of mortgage do you have?
You have to ask for a reamoritization if that's what you want
This. First Tech Credit Union does this automatically every month
What crappy bank doesn’t do this?
You probably have a Fixed Rate Mortgage. With FRM's extra principal payments do not affect the required monthly payment at all. You'll pay off your loan faster but the monthly payments are the same. You can sometimes negotiate with the lender to reduce it for a fee.
When you pay extra payment, make sure the payment is applied to principal. Some banks will just treat it as next month interest payment by default. If applied to the principal, the interest has to decrease as it is calculated ad percentage of the principal. Monthly payment will stay the same, just less of it will be interest.
It needs amortization recalc.. some banks do it automatic others require a call/request
Have you considered refinancing? I hear rates are 7yr low now
Depending on bank and or timing, it could reduce from next month not current mibth
You can “recast” your mortgage to reduce monthlies, often there’s a small fee
When I make off cycle principal payments to my car loan, I can see the daily accrued interest decrease ever so slightly. Sounds like your lender is ripping you off.
1. Make sure you paid it to the principal 2. 20k on what size of loan? Scale matters. 3. It does decrease. Ever so slightly. Your lender may be running a monthly batch process. Especially if it’s a credit union.
It reduces time to payoff not your monthly dues
I understand my monthly dues doesnt change, but my portion of interest should have changed? The portion interest to principal in monthly payment is same as before