Quick question about starting a loan for a house. The interest that is owed every month decreases as the remaining balance on my mortgage decreases.
For example if this months payment of 2,000 has 1600 going to the principal and 400 going to interest. I then pay 50,000 extra. Would next months payment of 2,000 have 1750 going to the principal and only 250 going to the interest?
The rates and numbers don't add up, just trying to make sure that is the case. Online guides don't really explain why its better to pay off early other than "peace or mind" and "finish paying off earlier".
Added (1). Additional Question: I just got a 20,000 dollar bonus and don't plan on buying/investing anything with it. Should I send the 20,000 as an extra payment to my mortgage now or in a few months? Would I end up paying less interest overall if I sent to today?
Read more: Monthly interest payment based off remaining balance?
