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Posted: 1/24/2021 8:45:13 PM EDT
[#1]
If you make an unscheduled non-regular payment principal reduction then yes your daily accrued interest owed would change as of that date.
However, if you merely make more monthly payments ahead of time then it’s very likely that you are receiving no financial benefit. |
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Posted: 1/24/2021 8:47:45 PM EDT
[#2]
Quote HistoryQuoted: If you make an unscheduled non-regular payment principal reduction then yes your daily accrued interest owed would change as of that date. But is mortgage interest calculated daily, or monthy? I'm pretty sure it's done monthly, with the two exceptions being the first and the final months of the loan. |
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Posted: 1/24/2021 8:47:48 PM EDT
[#3]
Quote HistoryQuoted: If you make an unscheduled non-regular payment principal reduction then yes your daily accrued interest owed would change as of that date. However, if you merely make more monthly payments ahead of time then it’s very likely that you are receiving no financial benefit. Who would retarded enough to make monthly payments early instead of principal payments? Apparently some people, as I see this an option in my online account. 
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Posted: 1/24/2021 8:50:22 PM EDT
[#4]
Quote HistoryQuoted: Who would retarded enough to make monthly payments early instead of principal payments? Apparently some people, as I see this an option in my online account. My original post clearly states a principal only payment. |
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Posted: 1/24/2021 8:51:15 PM EDT
[#5]
Quote HistoryQuoted: My original post clearly states a principal only payment. Not talking about you, talking about people who would do that. |
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Posted: 1/24/2021 8:51:29 PM EDT
[#6]
Quote HistoryQuoted: But is mortgage interest calculated daily, or monthy? I'm pretty sure it's done monthly, with the two exceptions being the first and the final months of the loan. Quote HistoryQuoted: Quoted: If you make an unscheduled non-regular payment principal reduction then yes your daily accrued interest owed would change as of that date. But is mortgage interest calculated daily, or monthy? I'm pretty sure it's done monthly, with the two exceptions being the first and the final months of the loan. Interest accrues daily. /banker |
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Posted: 1/24/2021 8:51:47 PM EDT
[#7]
Quote HistoryQuoted: Not talking about you, talking about people who would do that. Gotcha. |
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Posted: 1/24/2021 8:54:28 PM EDT
[#8]
Quote HistoryQuoted: Interest accrues daily. /banker That's weird, because when I make unscheduled extra principal payments, I do them on unpredictable days of the months, and the next interest amount is always dead-nuts aligned with my spreadsheet, which doesn't take what day I made said extra payments into account. It's done in months. |
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Posted: 1/24/2021 9:01:12 PM EDT
[#9]
Quote HistoryQuoted: Not talking about you, talking about people who would do that. Not a smart move for most, but maybe if they were going on vacation/hospital/jail for a few months? |
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Posted: 1/24/2021 9:03:07 PM EDT
[#10]
Quote HistoryQuoted: That's weird, because when I make unscheduled extra principal payments, I do them on unpredictable days of the months, and the next interest amount is always dead-nuts aligned with my spreadsheet, which doesn't take what day I made said extra payments into account. It's done in months. Quote HistoryQuoted: Quoted: Interest accrues daily. /banker That's weird, because when I make unscheduled extra principal payments, I do them on unpredictable days of the months, and the next interest amount is always dead-nuts aligned with my spreadsheet, which doesn't take what day I made said extra payments into account. It's done in months. You likely have negative accrued interest on your loan. Look at it this way, if you paid off your mortgage on January 20th, would you still have to pay for interest through January 31st? It’s likely they are billing you according to an amortization schedule where your P&I split doesn’t change even if you make principal curtailments. You should ask to get a full payment history where you can see how they applied your payments and how your bills are split. If they truly are applying them as principal curtailments and not adjusting how your interest would change each month (highly unlikely) then there’s an issue. You also have to remember that companies bill in advance. Meaning, I send a bill on the 15th that projects forward the whole month’s interest based on what I know on the 15th. If you make a curtailment on the 17th then the bill would of course not reflect that. |
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Posted: 1/24/2021 9:11:42 PM EDT
[#11]
Quote HistoryQuoted: That's weird, because when I make unscheduled extra principal payments, I do them on unpredictable days of the months, and the next interest amount is always dead-nuts aligned with my spreadsheet, which doesn't take what day I made said extra payments into account. It's done in months. You have to read the terms in your note and mortgage. Most mortgages are precalculated 30/360 interest method and not simple interest actual/365. Very likely you may not see the interest adjusted until the next calculation date. So if you pay principal on January 15th. Since interest was already calculated for the month of January your February amortization will follow as though no extra payment was made but the March would show it. Read the documents and it should be clear. FNMA servicing guide principal payments |
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Posted: 1/24/2021 9:17:59 PM EDT
[#12]
My mortgage payment is recalculated each year on the anniversary of the closing. Our monthly payment stays the same for the entire year. It is based on the current balance, interest, and estimated taxes & insurance. When we make principal reduction payments, it has no effect on our monthly payment until the anniversary and the re-calculating of our payment.
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Posted: 1/24/2021 9:20:19 PM EDT
[#13]
Quote HistoryQuoted: Interest accrues daily. /banker Quote HistoryQuoted: Quoted: Quoted: If you make an unscheduled non-regular payment principal reduction then yes your daily accrued interest owed would change as of that date. But is mortgage interest calculated daily, or monthy? I'm pretty sure it's done monthly, with the two exceptions being the first and the final months of the loan. Interest accrues daily. /banker For the typical mortgage, that's bullshit Making an extra principal payment helps Making half your payment on the 15th won't do a damn thing, typically |
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Posted: 1/24/2021 9:22:00 PM EDT
[#14]
I think the monthly interest payment is based on the amount of principal you start the month with. If at midnight on February 1st you have $100,000 left on the loan, that’s what you pay interest on.
...even though mortgages are paid in the arrears. |
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Posted: 1/24/2021 9:25:15 PM EDT
[#15]
Quote HistoryQuoted: My mortgage payment is recalculated each year on the anniversary of the closing. Our monthly payment stays the same for the entire year. It is based on the current balance, interest, and estimated taxes & insurance. When we make principal reduction payments, it has no effect on our monthly payment until the anniversary and the re-calculating of our payment. Does your total monthly payment decrease each January? If that’s the case, your loan is being recasted annually. IMO, you don’t want that. It just drags it out longer and costs more in the end. |
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Posted: 1/24/2021 9:27:46 PM EDT
[#16]
Accrues daily. That is why when you ask for a payoff they give you a ten day payoff because they know without any other payments what the per denim is.
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Posted: 1/24/2021 9:32:39 PM EDT
[#17]
Quote HistoryQuoted: Not talking about you, talking about people who would do that. Also: lenders trying to trick people. |
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Posted: 1/24/2021 9:32:48 PM EDT
[#18]
Interest is accrued on a daily basis, not monthly.
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Posted: 1/24/2021 9:41:11 PM EDT
[#19]
See Rule of 78s: https://en.wikipedia.org/wiki/Rule_of_78s
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Posted: 1/24/2021 9:45:48 PM EDT
[#20]
All but fha loans are daily I think..
So you’d pay 19days worth of interest at 100k then 11 days at 95k If it’s fha it’s monthly no matter how you slice it.. at least it used to be, could be changed by now |
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Posted: 1/24/2021 9:48:28 PM EDT
[#21]
I love how the bank that has my mortgage works. I can download my amortization schedule.
Every month we pay at least enough extra principal to knock off a payment at the end. The amortization schedule adjust automatically the next day. I enjoy watching the mortgage drop. |
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Posted: 1/24/2021 10:05:06 PM EDT
[#22]
Quote HistoryQuoted: Interest accrues daily. /banker This...daily. |
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Posted: 1/24/2021 10:10:22 PM EDT
[#23]
OK, I figured it out.
If I send my mortgage company curtailment (principal only) money, they accept it, but it goes into a holding pattern until the 1st of the following month when it is applied. So if send them a principal only payment on the 6th of the month, it doesn't do shit for ~25 days. I should note that they will not accept curtailment payments between the first of the month and when my normal monthly payment is due, which is the 5th of each month. Now knowing this, I think I am going to stop doing automatic monthly extra principal payments and start doing them manually at the end of each month. Otherwise, I'll be in a constant state of having curtailment money parked, doing nothing. |
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Posted: 1/24/2021 11:03:51 PM EDT
[#24]
Quote HistoryQuoted: Who would retarded enough to make monthly payments early instead of principal payments? Apparently some people, as I see this an option in my online account. In December, when you're trying to maximize your mortgage interest deduction and you've had a small windfall elsewhere or you're in the last few years of your mortgage. |
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Posted: 1/24/2021 11:11:58 PM EDT
[#25]
Quote HistoryQuoted: All but fha loans are daily I think.. So you’d pay 19days worth of interest at 100k then 11 days at 95k If it’s fha it’s monthly no matter how you slice it.. at least it used to be, could be changed by now This. Used to be a banker and now work for a title/escrow/closing company and deal with mortgage payoffs daily. Interest is daily except on FHA. |
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