How Do Principal Payments Work on a Home Mortgage?

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[dsmdriver]

Bought my house in 2013 and it'll be paid off next month!
100% debt free at 31 !!!

[MichaelDavis-cjyj]

Dave Ramsey's insights have been a game-changer for me! His practical approach to financial management has empowered me to take control of my money and work towards a debt-free life. The Total Money Makeover is my go-to guide, and I appreciate how he breaks down complex concepts into easy-to-follow steps

[susanpike]

I refinanced in August a $122K mortgage from 4% to 2%. I got a part time job (doing something I love to do) and am using the entire paycheck to pay down principal each month. Will be mortgage free by January of 2023.❤️ We’ve never had car payments and pay our credit card off each month. We taught all of our children how to live frugally and save for the future. Now we are teaching our 2 grandsons those same lessons. We’re both 68 and healthy. Thanks for all you do Dave!

[anndennis]

Never take a home loan that penalizes you for making payments early or paying extra payments.

[inkey]

I paid off a 30 year fixed mortgage in 11 years by paying extra on the principal every month

[larrybud]

One part of the discussion needs more explanation, and that was that when more goes to the principal, it means the loan gets paid off earlier and you pay much less interest in total. So if you had 100k loan for 30 yrs at 3%, your payments would be $421.60. The total interest on the life of the loan would be $51, 165.87. Now let's say the FIRST MONTH you paid an additional 10k. This works out to paying off your loan *54* months earlier!!! It would also save you almost $13k over the life of the loan.

In fact, if you paid only $50 additional/month, that loan would turn into a 303 month loan rather than 360 mo loan, and you would save $9k of interest on the life of the loan.

Magic of compounding interest!

[mudhudgie]

I paid off my 30 year, 4.25% rate, 5 figure condo mortgage in 12 months, put every every spare penny, roommate money, and killed my savings to do it but it is worth it.

[mbob]

I was a senior accts mgr at a major bank for over thirty years and never saw these principles explained better than here.
We were all taught these facts during High School Economics classes, but at age fifteen, we promptly forgot them, lol

[robynrosado]

We keep our monthly amortization schedule for our mortgage printed out and on the fridge. I LOVE crossing out multiple lines every month...just a few more years until we can cross that last line (originally dated for off!

[runningfun]

I like making my extra payments weekly, not because of any special math but more psychological. Similar to how paying off smaller debts first boosts your confidence to keep going, I want to make sure that as soon as payday comes I make the extra payment. Once I'm more disciplined with time, money, scheduling I can change that up.

[robchandler]

"Oh OK" This is the very stuff they need to teach in school. 1984 my first period class was Economics. Later in life I would compare my mortgage statements. It was like a drug to make those extra principle payments. I have paid off two houses in my life. Nothing beats that feeling.

[TheEllaTB]

I keep my amortization schedule handy and I mark on it every payment we make. Since we always pay extra it's awesome to watch how much we save on interest and how fast we are progressing through it

[AllinTMC]

a year ago, all this info would be a different language. Now it's second nature. Thank you Dave

[anthonyanderson]

5:27 so true! I've been saying this for the longest time. They don't teach you what you really need to know as you're going through school. no disrespect to Shakespeare or Trigonometry, but teenagers to learn as early as possible about principle vs. interest, balanced budgeting, and interest rates. These are the things that will truly affect them the rest of their lives.

[FOhlookajew]

THIS MAKES SENSE! Thank you caller for your question, and Dave for your explanation!

[ImOldandSoAreMyBooks]

We are down to $128k! Can't wait till we finally pay off the house!

[elsinorebrewing]

I got my home paid off in 11 years due to lowering my ammortisation period to 12 years as well as doubling the saved myself at least $60, 000 in interest to the also slammed the mortgage with yearly over payments.

[rfdfire]

Dave Ramsey has gotten me out of more debt!!!! I just want to say thank You Dave!!!!

[chrissylogan]

I was today years old when I finally understood how my mortgage interest works... even after my husband trying to explain it a dozen times. Thanks, Uncle Dave.

[bradvincet]

Personal finance and how the monetary system works should be mandatory in high school. Schools are very negligent preparing young people for the real world.