Happy 2008.

If you already own your home and are making payments (what, you haven’t defaulted? what’s wrong with you?), you might wonder, what will happen if I make an extra payment toward the principal balance?

Answer is, it varies, depending on the top of loan you have.

Sadly, if you have a fixed-rate loan and make an extra payment, your outstanding balance will go down (obviously), but your monthly payment will not.

If you have an adjustable rate loan or an interest only loan, your payments will go down, at some point.

Source: Extra payment to principal may not dent monthly payments – The Mortgage Professor, Inman News, by way of Mortgage101.com

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