Quote:
Originally Posted by Cecil Terwilliger
These are the same thing. All you are doing with accelerated payments is paying more than you are contractually obligated.
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I am aware that they are the same, my point was the
flexibility it provides. Yes, at the end of the day any extra $ over what you're obligated to pay goes to the principal.
What the lump sum and random extra monthly payment amount I eluded to do is allow you, when you have the extra scratch, to throw some bones at the principal. Some people will say things like " I am commission based, so I can't afford to do accelerated, because some months are tight". What the lump sum and random monthly payment increases do is allow that guy to decrease his principal while not sticking him in a bind on 'short' months.
So, for Joe blow who isn't the best with his money, sticking to a 25 year monthly mortgage is fine, as long as he puts extra against the principal when he can. It will, as you said, give him the same benefit as the accelerated bi weekly, but without the stress of "what happens if I'm short in July when I take a vacation and don't get paid for a few weeks" situations.