Extra payments on mortgage does it affect tax refund amount now or towards end of loan?

[Anonymous]

I want to know if I pay extra on my mortgage payment will it be lower the next month or will it be lower the next year? ie

payments $1300 I pay $2600 will the next month be $0? Or will it still be $1300? and make the payments lower for example the next year (or whenever) Also I'm assuming it will affect the money I get back for taxes correct? Which shouldn't be an issue if the mortgage gets paid early right?

Edit: I actually found out the answer. It will just pay off early. But I still want to know if it the amount of money i get from tax refund will decrease by a lot or will that happen towards the end of the loan? 

[Time2letgo]

Your extra payments will affect your loan based on how you instruct your mortgage company to appy it. So based on what your intentions are and your reasoning behind prepaying. 

1. You can prepay any amount of months and you will not have a mortgage to pay for those months. 

2. You can prepay principal by appying the extra amounts to principal only, next month you will still owe your full mortgage payment - this one has the best results if you're looking to pay off the mortgage early and save on interest. The monthly payment amount does not get adjusted unless you re-finance so you will still be paying at least the agreed amount each month and the following years until it's paid off. Most mortgages does not have a pre-payment penalty but that's something to look out for in your closing documents and loan agreement.

3. You can make additional payments towards escrow, this is recalculated annually so if you overpay the mortgage company will have to send you a refund check.

Your tax refund, if you itemize your deductions is calculated based on the interest you pay on the mortgage, along with other things; so prepaying will not have any effect on that. 

[Revelate]

It's a simple interest loan so prepaying anything at all reduces interest generated.

That said, you're still only saving $0.33/dollar (or whatever you tax bracket is) when it comes to a deduction so I think this is a somewhat suspect rationale for basing a financial decision on.

[JVille]

Item # 1 DO NOT I repeat do Not prepay Mortgage payments without getting specific permission from your Loan servicer. You could find ALL of those excess payments simply being applied to Principle and not as regular payments. In other words your future payments will still be due! There are actually specific rules (Fanny/Freddy, etc) governing prepayments and not allowing prepaying interest not yet due. So please get this in writing if your intent is to pay multiple payments in advance.
We never had an issue posting a January pmt in late December but that’s about it.
Please seek written authorization (or an email response) prior to making advance pmts.

[Anonymous]

On the website where I make payments there is no way to add more to the monthly payment. There is an option to add to principal. I actually got through to them on the phone I was told same thing. Extra payments made does not change monthly payments. Only goes to principal. Thanks