If you ever pay extra towards the principal, DON'T make the same mistake I made. I basically did the wrong thing for 3 darn years, costing me so much in paid interest and the length of my loan.
Here's the key. When you prepay any amount on your loan, it is a MUST to include a note or letter to the bank asking them to apply this to payment # 1 (or whatever payment number you are on). If you don't do this, the bank does what's best for them and makes them the most money, which is apply it directly towards the principal AT THE END OF THE LOAN (to the last payments).
By applying the payments to the front end payments, you are resetting your amortization schedule from the amount you originally mortgaged to the new amount of your loan. Letting them merely apply the extra payment to the principal does not reamortize the loan.
Now, I feel like a DUMMY because I did this for 3 years for $500 each payment. I'm kicking myself in the ARSE for not knowing this earlier. I wanted to share with all my DG family so you're in the know if you're even in a position to pay more money towards your mortgage. It will save you thousands, if not 10s of 1000s of dollars!
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