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Apply to Principal |
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I pay bimonthly and pay almost double on my mortgage. I have done so for almost 12 years.
My mortgage papers state that I can make early payment apply to principle. Each time I have asked about doing this over the years I have been told that their method of applying m extra and early $ as a normal payment works out the same as appyling to principle. With this method in place, my next payment is not due for 4 years. While I will continue to make the early and extra payments, would you advise I "get legal" ? It seems that by reducing the principle as I have asked would be a significant savings in interest.
Mortgage holder also reports to credit bureau that
I pay $375 per month when I actually pay $750. Only $477 due monthly on fixed rate. Thanks for our help.
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The credit bureau wants to know how much you owe every month and whether you pay it on time, so the information they're getting is accurate. They don't have any system for recording the fact that you actually pay ahead of time.
As for the interest payment -- let's look at that four-years-from-now payment you just received credit for. If you could see the breakdown on it, you'd see that much less interest was due on that one, and more of the amount you sent was credited toward principal. Not sure I'm explaining it clearly, but when they credit you for a payment ahead, they also credit you with a reduction of principal, and less interest due every month beyond that. You're not being cheated, so you can relax and feel proud of your sensible achievement. |
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Edith
Originally published on January 3, 2008 |
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