The most important thing to do when considering doing a different payment schedule, is look at the loan documents. There may be a prepayment penalty or fee for pre-paying. The penalty may only last for an initial few years. The terms of the mortgage may be explicit as to when you pay, and you may not be able to alter the terms without additional fees.
If you can’t alter the payment terms to allow accelerated paydown of the mortgage, place the difference in a separate account rolling them over into laddered CDs. If you feel more brave, try investing some of the money in mutual funds or stocks (do your own research on which to invest in, don’t trust the suggestions by most of the ‘pros’.)
You may want to check your mortgage. Something is fishy on your payment. You are either paying some serious points or something. A fixed 6.35% I/O on $475,000 should only have a monthly payment of about $2513.54 until it goes amortizing at the end of the 10 year period.
