Posted on: 04th Nov, 2008 04:14 pm
i have an equity loan with a principal balance of $22,180 at 8.24% interest rate rate. the monthly payment is $197.07. i have $500.00 extra monthly to apply to the principal. the question that i have is would it be recommended to pay a certain amount daily, weekly, bi-weekly or monthly. i don't want to say what i think that is what has led me to submit my question but will be greatly appreciative to receive suggestion or opinion from someone who went through this and made it through without going crazy.
Hi freeworld!
Welcome to forums!
As far as I can understand from your question is that you have an interest only loan and you would like to contribute certain amount to the principal. If this is the case, then I think you can contribute monthly towards the principal amount. However, you should check if there is a prepayment penalty attached with the loan or not. If not then you can start off paying some amount to the principal clause immediately. If there is a pre-payment penalty, then once the penalty period is over you can start making the payments.
Feel free to ask if you have further queries.
Sussane
Welcome to forums!
As far as I can understand from your question is that you have an interest only loan and you would like to contribute certain amount to the principal. If this is the case, then I think you can contribute monthly towards the principal amount. However, you should check if there is a prepayment penalty attached with the loan or not. If not then you can start off paying some amount to the principal clause immediately. If there is a pre-payment penalty, then once the penalty period is over you can start making the payments.
Feel free to ask if you have further queries.
Sussane
freeworld, i highly doubt you have a penalty on your loan. your topic indicates that your loan is based on daily interest. by prepaying, you have the opportunity to greatly reduce your overall interest costs.
paying daily is, to me, a little bit silly...what do you do, divide the 500 by 30 and pay $17 every day on principal? what about weekends? you could easily do this weekly @ $125 per.
here's my personal experience. i had a 1-year adjustable rate mortgage with my credit union. every friday, i transferred by phone one-quarter of my monthly payment (actually a greater sum) toward the loan. by doing so, i greatly increased the paydown of the loan, and greatly reduced the interest costs as well.
paying daily is, to me, a little bit silly...what do you do, divide the 500 by 30 and pay $17 every day on principal? what about weekends? you could easily do this weekly @ $125 per.
here's my personal experience. i had a 1-year adjustable rate mortgage with my credit union. every friday, i transferred by phone one-quarter of my monthly payment (actually a greater sum) toward the loan. by doing so, i greatly increased the paydown of the loan, and greatly reduced the interest costs as well.
