What happens when you make extra payments but don't specify principal reduction?
Lets say your loan payment is 0 a month.
What is the differences between:
making a regular payment for 0
making a regular payment for 0 plus an additional principal reduction payment for
Is it the same thing?
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Choice 1 will likely make the payment due and also apply to the next month's payment due. So you'd owe in month 2.
Choice 2 will make the payment due and then lower the principal by that . At 6% over 30 years, that will knock off more than 0 off the last payment due.
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