macdave said:When you get to the next adjustment (usually 6 months), your payment will go down and the term will stay the same.You know that without even reading the OP's loan documents? Amazing...

macdave said:It is pretty standard. Each adjustment, (usually every 6 months)they will figure your payments based on the new rate, remaining principal and number of payments left. So if you make additional principal payments the term stays the same with an ARM.My point is that rules of thumb or what usually happens or what is "pretty standard" has no bearing at all. Many (most? almost all?) people enter into the largest transaction of their lives without reading the documents, understanding the transaction or asking the right questions and operate on basic assumptions which may or not be correct in their case. Read the terms, folks.

Beckles said:xpaphil said:Don't forget to note that the extra amount you are paying is to be applied to the principle and is not a prepayment of monthly payments. Interest is based on the remaining principle. As that goes down so does your remaining balance and length of expected payoff.Maybe someone can correct me if I'm wrong, but since you can't even spell principal correctly, I'm going to have to think you may not know as much about mortgages as you think you do. If I have a $1,000/month mortgage payment and I send in $10,000 and they were to credit that as 10 months of payments, the account would be credited for the principal + interest payment for the next payment due, then 9 more monthly payments that would be 100% principal payments, and the subsequent payments would reflect the lower principal amount. How would that be a bad thing? Seems to me it would be very useful to be 9 or 10 months ahead on a mortgage payment in case something unexpected comes along.To follow up my own post, I guess there could be a problem with the silly way mortgage payments are calculated based on one month of interest no matter what. It's a mystery to me why mortgage loans use that simplification instead of the more logical method of daily interest charges like most car loans or even home equity loans.

Beckles said:xpaphil said:Don't forget to note that the extra amount you are paying is to be applied to the principle and is not a prepayment of monthly payments. Interest is based on the remaining principle. As that goes down so does your remaining balance and length of expected payoff.Maybe someone can correct me if I'm wrong, but since you can't even spell principal correctly, I'm going to have to think you may not know as much about mortgages as you think you do. If I have a $1,000/month mortgage payment and I send in $10,000 and they were to credit that as 10 months of payments, the account would be credited for the principal + interest payment for the next payment due, then 9 more monthly payments that would be 100% principal payments, and the subsequent payments would reflect the lower principal amount. How would that be a bad thing? Seems to me it would be very useful to be 9 or 10 months ahead on a mortgage payment in case something unexpected comes along.Maybe because, spelling a word correctly or not has "no" bearing on the correctness of the information.

If you send an amount equal to 10 monthly payments, they will pay the interest portion for that month and then apply the entire remainder to the principal. This will cause each subsequent payment to have a smaller interest portion than the standard amortization and a larger principal portion. This will result in the mortgage being paid off quicker with less interest changes.

However, your payment "will' still be due for the subsequent months, and will be late if you don't make it.

btuttle said:Beckles said:xpaphil said:Don't forget to note that the extra amount you are paying is to be applied to the principle and is not a prepayment of monthly payments. Interest is based on the remaining principle. As that goes down so does your remaining balance and length of expected payoff.Maybe someone can correct me if I'm wrong, but since you can't even spell principal correctly, I'm going to have to think you may not know as much about mortgages as you think you do. If I have a $1,000/month mortgage payment and I send in $10,000 and they were to credit that as 10 months of payments, the account would be credited for the principal + interest payment for the next payment due, then 9 more monthly payments that would be 100% principal payments, and the subsequent payments would reflect the lower principal amount. How would that be a bad thing? Seems to me it would be very useful to be 9 or 10 months ahead on a mortgage payment in case something unexpected comes along.Maybe because, spelling a word correctly or not has "no" bearing on the correctness of the information.

If you send an amount equal to 10 monthly payments, they will pay the interest portion for that month and then apply the entire remainder to the principal. This will cause each subsequent payment to have a smaller interest portion than the standard amortization and a larger principal portion. This will result in the mortgage being paid off quicker with less interest changes.

However, your payment "will' still be due for the subsequent months, and will be late if you don't make it.I was only responding to someone who said that it could be credited as ten payments. I would agree that most banks would not credit such a payment to any loan in such a way and would do exactly as you said, credit it as a principal payment, I was only speaking on the alternate scenario offered by another poster.