# Questions tagged [principal]

The tag has no usage guidance.

30 questions
Filter by
Sorted by
Tagged with
4k views

### How exactly does a biweekly payment schedule on your mortgage reduce the amount of overall interest paid over the life of the loan?

Here is how a normal fixed-rate monthly amortization schedule is calculated: First we determine the total monthly payment: Payment = [P*(r / n)(1 + r / n)^nt] / [(1 + r / n)^n*t - 1] where n = 12, P ...
• 161
3k views

### Mortgage escrow and insurance premium refund

I live in Florida. Two months ago my mortgage company sent payment (almost \$5K) to my previous home insurance for auto-renewal. I found another insurance company to cover my home for far less and ...
• 131
1 vote
124 views

### Additional principal payment split between interest and principal [duplicate]

I made an additional payment with my first mortgage payment but I noticed that although I designated the additional payment, say \$10, as principal the remaining principal balance didn't go down by the ...
1k views

### Is there a function/formula for the principal and interest lines in a mortgage graph?

When you use a mortgage calculator sometimes the results coming with a graph as well showing interest and principal paid every month. Image below... Is there a formula/function that defines those ...
9k views

### What does "not touching the principal" actually mean?

When talking about "trust fund children" or large savings it's common to hear the phrase "not touching the principal", which means that only the "earnings" from the money ...
1 vote
3k views

### Making large payment on Mortgage not lowering maturity date

I recently began a 30-year fixed rate mortgage on my new house on April of 2020. The maturity date for this mortgage was then 04/01/2050. In their website, they had an amortization schedule with ...
1k views

### How much share should I get in our property

In 2012, my brother, my mom, my dad, and I bought \$349,000 property with 10% down to it. I paid the most towards the down payment, \$10,000. Our mortgage is around \$1,600/month and property tax of \$2,...
• 63
1 vote
387 views

### Bonds: Is "principal" a synonym of "face value"?

Consider a bond that has a face value (or par value, or nominal value) of \$1000. Suppose I buy this bond at a price of \$950. Is this \$950 the principal, or is the principal \$1000? From my perspective, ...
• 17.2k
1 vote
32 views

### Enhancement of the open source lib for calculation of IRR (internal rate rate)

I am cs student , and has been asked to enhance the documentation for open source lib finance.js for IIR (internal rate of return) for various industry Here I am trying to calculate IIR for the ...
2k views

### Do extra mortgage payments typically go directly towards principal?

I have a 30 year mortgage and I'd like to make extra payments each month to speed up the amortization schedule. I thought this would be better than taking out a 15 year mortgage as it gives me some ...
• 21
1 vote
182 views

### What is the formula for loan payoff with daily compounded interest and annual payment?

I am trying to get the loan repayment amount for below data : Loan Amount: \$20,412.65 Payments (#): 10 Annual Interest Rate: 2.5% Loan Date: 07/02/2018 First Payment Due: 09/02/2018 (next payment ...
• 11
2k views

### What about paying extra principal on a weekly basis?

I have a branch where my mortgage is held, very close proximity to my house. I have extra cash flow on a weekly basis. If I make an extra \$500 dollars a week, vs paying \$2,000 at the end of the ...
2k views

### Credit Card Amortization via Principal-Only Payments

On a home loan amortization schedule, I can make the monthly payment and add the principal-only owing for the "next" payment along with it, and avoid paying the interest for that next month, which ...
845 views

### Additional mortgage payments don't automatically go toward principal?

I have a 4.51% ARM (with a credit union) on some land I own. The monthly mortgage payment is \$83.27. I increased my monthly payments to \$250.00 but recently discovered the extra money (\$166.73) was ...
291 views

Here is a hypothetical scenario I was discussing with someone today that I think seems fishy, but I can't find much info on. An adult gives money to his 20 year old kid to buy a house as a gift. The ...
3k views

### Calculating amortisation payment amount, where first payment date differs from loan start date

I'm trying to reproduce the schedule, but I cant seem to get the same Payment and Interest for each month. The tricky part here is that the Loan start date is 9 Feb 2017 but the first payment is only ...
• 133
18k views

### does interest payment on loan stay the same if I pay early

Hopefully, my question doesn't sound dumb, because I'm not a finance guy. Suppose I have a 100k loan, and the monthly payment is 1k. My loan payment goes 600 to interest and 400 to pay down ...
• 555
1 vote
643 views

### Paying part of the mortgage before remortgaging

I am aware the exact answers to my questions below may depend on the conditions of the mortgage but I would still be grateful for some advice and pointers. Let's say I took a 2-year fixed rate ...
• 113
7k views

### Why is the breakdown of a loan repayment into principal and interest of any importance?

Repaying a loan is a type of cash outflow. Why should I care which part of each payment goes towards the interest and which part towards the principal? "A loan is a loan", no? I know that this ...
• 528
13k views

### What is the formula for loan payoff with daily compounded interest and monthly payment?

My goal is to make a graph using this formula for all possible monthly payments. Let's say... Loans: 21750 Monthly Payment: 220 Daily Interest: 4.0% / 365 What formula would I use to get the total ...
• 125
106k views

### Why do banks want you to pay off interest before principal?

When you take out a traditional mortgage the first payment you make to a bank pays off mostly interest and then later payments start paying off principal. What is the reason for this? Is it just a ...
• 819
40k views

### Why does the principal/interest applied to my balance fluctuate in spite of making payments on-time?

In my first payment on 6/03/2011, the principal applied to my balance was \$261.11 and the interest was \$221.64. As I kept making the payment on-time, the principal applied to my balance kept ...
• 763
1 vote
1k views

### Formula for recalculation of a bad loan, i.e. where payments were missed?

I need to know if exists any formula to calculate interest rate, principal interest, total amount to be paid, in the case of a bad loan. Ex: In a bank exists a 20 year home - loan. The client was ...
• 111
6k views

### Paying Off Principal of Home vs. Investing In Mutual Fund

I close on my first home October 21. I've locked in a 4.330% APR on a 30-year fixed conventional mortgage and my payment will be ~\$800/month. I've put the required 20% down to avoid paying PMI. ...
2k views

### How do principal payments on my mortgage affect my taxes?

If I choose to pay a larger chunk into my principal say every 6 months, does the extra money I pay into it become tax deductible, or how does it affect my taxes in general. Also, I'm self employed if ...
• 191
6k views

### Why making additional payment to mortgage counts towards principal? Why does it matter?

When it comes to mortgage advice, some people recommend making an extra payment. The logic is :"These extra payments are automatically applied to your principal, not interest". Why does it matter if ...
• 16k
3k views

### Should I pay the interest or the principal on my second mortgage?

We have a second mortgage on our home from 10/08. It was designed to be deferred for five years, so we're right in the middle. After the deferral, our monthly payment will be \$413.74 for 25 years. ...
• 193
534 views

### What 25-day investment, principal guaranteed, can be used for credit card arbitrage?

What is the most profitable 25-day investment I can make that guarantees that I at least get the principal back? Notes: Many brokers accept credit card deposits w/ no fees, and the credit card ...
1k views

### Paying over minimum monthly charge of credit cards

I have a \$80 minimum on my credit bill. If I pay them \$100, do the additional \$20 go to the card's Principal or Interest? If it goes to Interest, do I have to explicitly state that those \$20 go to ...
• 181