How Do Principal Payments Work On A Home Mortgage?

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[MizThe]

If anything, it's likely to get worse. Affordable housing will soon become unaffordable. Therefore, I advise taking action now because today's prices will seem like bargains tomorrow. Until the Fed takes more decisive action, I expect we will see hysteria due to rampant inflation. You can't just halfway rip the band-aid off.

[erikrosenmeier]

“This is the stuff they should teach in high school”. Absolutely, I was fortunate enough to take a personal finance class. We learned this exact thing. It should be part of common curriculum everywhere.

[rogerpullin]

I was about twelve years old and a real estate agent explained this to my mom, not sure if she used it, but I did. Paid off my mortgage early, have not had a mortgage for 30 years, enable me to invest in my future, life is good. The farmer is not going to tell the cows where the fence is weak.

[rociorocio]

O my gosh. Who has learned more random knowledge from Uncle Dave rather than high school and university?!

[jaypan]

Dave is the only finance guy who explains things straight forward.

[tito]

The "tables" that shows the "columns" that show how much of your payment is going towards principle and interest is called an "amortization schedule" 👍 Hopefully I just helped out a few of you guys 😎

[robertromero]

When I did a refi in 2014, I created an Excel spreadsheet that showed exactly how much principal and interest I was paying month by month, as well as the remaining balance. I paid off the 10 year loan in 5 1/2 years.

[adolfomendez]

God bless Dave Ramsey, he changed my life for the best, all you have to do is listen to his teaching, believe in your self and work hard to build a better future.

[Nilsosmar]

Point is, you can pay off your mortgage in 30 years... or if you pay the principal down each month, you can pay off the same mortgage in 25 years... or 20 years... or 15... or 10... or 5 years, depending on how much you prepay. You can save literally hundreds of thousands of dollars in interest, by making early prepays on the principal. Just make SURE the bank is applying the prepayments to the principal, NOT to the interest.

[AliceObscura]

Dave, I have an MBA, and some of the ways you explain things is so clear and straightforward that I wish you had been my professor for all of my finance classes. I would've gotten so much more from them with your clarity and breaking it down approach!

[him.]

Making one extra payment a year (12months/13 full payments) will cut a 30 year mortgage to 24 years.

[concesi]

Ok Mr. Ramsey...I've become this crazy Gazelle on steroids. I've been attacking my mortgage since May 2018 all thanks to you and listening to your shows. I have skimmed off 5 years worth of payments so far. I must say this is def not easy but pretty rewarding once you see big chunk come off after a certain point. I def live like no one else. Not many understand what I am doing and the same people often times say I am crazy. They speak to me as if there is nothing else to do after a mortgage is paid as I am often asked... "So, you get your mortgage paid and then what?" I say.. then I live like no one else does :) If my amortization numbers hold true with the numbers I believe I can apply to mortgage each month.. I'll be doing my debt free scream in 6 years. maybe 5! Who knows maybe I'll surprise myself and be done earlier. I'm hungry and determined to be free from financial slavery. Amen!

[JuanLinarez-gttp]

This vato is awesome! I have been paying $250-300 monthly, but after coming across this guy I’m determined to make at least $1000.00 to the principal. I just need to make an upgrade to my house, and after I’m done, I might be making $2000.00 monthly payments to principal. God willing.

[RichardoBrit]

What should be said is that the first few years are nearly 100% interest. This is when you should increase your payment amount that goes directly to principal as it will radically lower the number of total payments. But in the final 5-10 years of a mortgage, it’s almost 100% principal so the need to pay more is less important.

[laneblount]

Very well said. I started paying $100 extra a month on my mortgage to pay more towards principal

[herbiehusker]

Dave's face when she said she has a weird personality and might get a little crazy is priceless.

[jordanneal]

This really makes it clear the power behind making extra principle payments on your mortgage. Not only does it bring your principal down, but increases the power of future payments in bringing your principal down.

[cynthiacoc]

I just learnt something. you dont need to send extra payment to the bank every
week for your principal. only once a month it is calculated.

[carolbenson]

Its a shame that everyone who buys a home with a 30 year mortgage only pays one payment a month. You can pay off a loan 8 years early just by splitting your payments in half each month or by paying extra principal each month...so many ways to getting the mortgage paid off early but we aren't taught this at any time.

[theadvocate]

My mortgage company lowered my mortgage payment when I started paying more on the principal. I didn't fall for it. I'm going to get that sucker paid off as soon as possible!!! 😁