|
Posted by h on February 8, 2010, 12:13 pm
Please log in for more thread options
> If a mortgage payment is due on the 30th of each month, is there any
> advantage to paying it on the 1st of each month?
>
> (Pay earlier than the due date each month)
>
Yes, depending on how your loan is set up, you'll be saving some interest
money by paying early. Very likely that you'll save a whole payment or two
by the end of the term. Maybe a lot more - depends on how the loan is set
up.
|
|
Posted by Robert Neville on February 8, 2010, 9:20 pm
Please log in for more thread options
>Yes, depending on how your loan is set up, you'll be saving some interest
>money by paying early. Very likely that you'll save a whole payment or two
>by the end of the term. Maybe a lot more - depends on how the loan is set
>up.
Not exactly. In the US, most ontime mortgage payments are applied as of the
payment date (usually the first of the month), regardless of when the payment is
actually received. In other words paying two weeks ahead of the due date or two
weeks behind (assuming you are still in the grace period) will have zero effect
on the interest charge.
On most US conforming mortgages, you can make a significant change (reduction)
to the lifetime interest charge on your mortgage by making "extra" principle
payments. Those payments can usually be made as an extra amount on your regular
payment, or as a separate payment. It's important to make sure those payments
are credited as principle reduction payments and not just stuffed in your escrow
account.
However, keep in mind that with extra principle payments, the savings comes at
the end of the mortgage in the form of an earlier payoff date - it will not
reduce the amount of your monthly payment. It will also be reflected in the form
of a smaller mortgage interest deduction each year. This may or may not be a
good thing, depending on whether you are subject to AMT.
Given the historically low mortgage rates these days, paying off your mortgage
early should take back seat to paying off car loans, credit cards and building
up your personal cash cusion.
|
|
Posted by Stan Brown on February 9, 2010, 1:28 am
Please log in for more thread options
Mon, 08 Feb 2010 19:20:32 -0700 from Robert Neville
[mostly good advice]
But the word is principal, not principle!
--
Stan Brown, Oak Road Systems, Tompkins County, New York, USA
http://OakRoadSystems.com
Shikata ga nai...
|
|
Posted by Robert Neville on February 9, 2010, 8:45 am
Please log in for more thread options
>But the word is principal, not principle!
Too late at night and fighting flu for past 3 days. You are correct! Cusion
should have been cushion as well.
|
| Similar Threads | Posted | | Re: Pay mortage payment before due date? | February 8, 2010, 1:18 pm |
| Re: Pay mortage payment before due date? | February 8, 2010, 2:02 pm |
| Re: Pay mortage payment before due date? | February 9, 2010, 1:27 am |
| Why is Discover Card changing payment due date? | May 15, 2009, 7:34 am |
| Mortage loan, Fast credit repair,home based business | January 2, 2007, 12:14 am |
| Mortage loan, Fast credit repair,home based business | January 2, 2007, 12:22 am |
| Re: I am 35 years old and never been on a date | January 4, 2007, 12:27 am |
| Re: I am 35 years old and never been on a date | January 4, 2007, 8:39 am |
| Shoes have a "Use By" date? | March 19, 2007, 3:48 am |
| Important News Before Tax Date! | April 7, 2007, 11:04 am |
|
|
Yahoo! 
Google 
Windows Live 
del.icio.us 
digg 
Netscape 
XML Sitemap