As a salesman, my income varies widely, but my mortgage is steady at about $1,000 per month. If I pay $2,500 to the mortgage after a good month, and then have a bad month, is it OK to skip a payment?
Answers | 8
Keep in mind, if you manage to make early payments, you save no interest. If 2 people have identical 30 year mortgages, and one pays 15 days early, the other, 10 days late, but before penalty, the final payments are the same, no difference in interest.
What I recommend is to set up an account with direct debit. Instruct the lender to debit that account on the 7th or 8th or each month, and make deposits to it with this extra money. It will help you smooth out the bonuses and extra income. At the end of every year, or however your 12 month cycles go, see if that account is growing. If it start to get to be 4-6 months payments, then consider a prepayment of principal.
To 'moma' - no idea what you mean. Payments either go to interest+principal (the regular payments) or principal only. What is a 13th payment? I can pay extra principal with any monthly payment I wish.