Are you going to be making full extra payments? During our refi I searched high and low for a bank that would allow us to make 1/2 payments twice a month - this supposedly reduced the length of a 30 year mortgage by 7 years.
The way most banks do it is to accept your first 1/2 payment, hold onto it (without paying interest) until you make your second 1/2 payment, then apply it to the mortgage - this method still allows interest to accrue as if you were only making one payment a month - but allows for an extra payment every year, for 13 payments per year instead of 12. Not much savings there, if you do the math.
If the bank were to apply the 1/2 payment to the mortgage immediately upon receipt, there would be less interest accrual that could occur before the next payment as the balance goes down more quickly. Most banks DON'T do it this way. In fact, I never found one that does. Even our little community bank doesn't do it this way. Makes me SO angry. It's still only 13 payments per year, but the interest expense is less. The banks are scamming us when they set up partial payment plans on mortgages b/c while you still experience some savings, you don't experience the full potential of those savings if they were to apply the 1/2 payment as it's received.
Moral of the story - if you are only supplying a partial payment as your "extra", keep it in your savings account until you can apply a full extra payment... bank that interest instead of letting the mortgager hold your money interest free. You'll be the winner in the long run. And if you set the interest you earn aside, it can help supplement that trip to Spain. :)
I make one payment a month - just add extra and tell them to apply it to the principle. The coupon has lines for applying the money to principle or escrow.
I'm working on a "project" for the boss. He has to do his re-certification with the american board of internal medicine and this year its a bit more complicated. Its stressing me out trying to figure out what is needed and where to find all the information! I will be using all the extra hours I plan to put in!
Hubby and I are going walking before dinner. :)
I would like to start adding extra to our principal as well when my husband gets a full time position.
Hope you have a great weekend. Try to stay away from the rum girl.:p
[QUOTE=tomi;1118769]I make one payment a month - just add extra and tell them to apply it to the principle. The coupon has lines for applying the money to principle or escrow.[/QUOTE]
I would verify with them that they apply it immediately. Just to be sure. I remember our payment book having a spot for adding to principle, but it was "held" until there was a whole payment to apply. Wells Fargo "holds" the payment too - which irks me. I wish I could find a bank that would actually apply the payment to principle when I make it instead of sitting on it.
It's awesome that you'll have it paid off so soon. While I'm holding out for the government to forgive my student loans, I'll be doing the snowball on our mortgage as well - after I save up 6 months salary and save for our kids' college. It'll be a while - probably 4-5 years before I can start snowballing the mortgage, but it'll get here eventually. :)
Thanks, P - my weekend will be rum-free!
Jenn - we had Wells Fargo prior to this and the extra payments were always applied along with the regular monthly payment. Its seems like doing it any other way would be fraudulent. I mean - they HAVE your money - they HAVE to apply it to your account. But I'm going to check anyway. Now we have PennyMac. Never heard of it before - but there you go!
Today was mom-shopping day. I get to listen to her tell me the same stories she's told me 50 times before. Theres a woman who she hasn't seen in 3 years - but she still hates her and blames her for all her unhappiness! UGH! Well, she chose to let the woman push her out of her social group so its her own fault. Mom never did "play well with others" --- she's too self-centered and immature. I hate going there. But - I feel obligated - she is my mother afterall.
This afternoon I am doing a little work at home. I decided I could probably work better from home since I need total concentration to figure out this re-certification thing that I'm helping the doctor with. Its confusing and complicated! I should be getting paid more for doing this - its way above my pay scale! Its all online - but the instructions are scattered and confusing - so I'm printing out what I need to in order to make sense of it all!
Better get back at it!
I wonder why they won't apply our extra payments then. Maybe it was b/c we wanted to do partial payments (1/2 payments every 2 weeks) and not just "applying extra" like you're doing. I didn't think about it before, but maybe the two are handled differently.
Could be? I've never done partial payments - just a whole payment with added principle. Either way - they have your money and it should be applied. UNLESS, they won't do it because of the extra data input expense. Someone would have to post 2 payments to your account instead of one. But still - doesn't seem legal to 'hold' the funds.
Last night we made Meatza for dinner, and had the other 1/2 for breakfast. It was very good and we will be making it again!
Food for the weekend has been very good. Aside from the mayo in the uncle dans mix I think I've been 100% primal. But, the scales aren't budging so I think I need to be drinking more water and maybe eating smaller portions. The meatza was pretty salty.
I've been trying to convince hubby to go primal with me --- he's resisting! I've noticed he is getting a bit heavier. I don't want to see him get any bigger.
Worked in the yard today - started cleaning up the fish pond for the coming season. We need to clean out a lot of sediment in the bottom of the pond. We also transplanted a bunch of daylilies and did some weeding. The tree company is supposed to be coming this week to take down a very old cherry tree that is right where we want to put the raised bed veggie garden.
Spring is coming! :) I so love this time of year!
I was badgering my husband all weekend about his diet. I feel awful. But he's gaining weight - and telling me he's eating healthy. Yet, I stopped by the boatshop on Friday and they were eating pizza. They said all week they had been eating salad with chicken for lunch. He got mad at me last night. Said he had changed his diet at least 70% but its never enough for me. well, no its not. and I don't think its 70%.
Last night we got chef salads from Shari's -- he went to pick them up - and came home with an apple pie. I told him I wasn't going to eat any of it. He took it to work with him. He said he was going to tell Joe to take it home. He wanted to know why wheat is bad for us. I tried to explain in simple terms. I asked him to watch the video Sugar - the bitter truth with me. He agreed, although reluctantly. I don't know if he's gonna make the switch or not, he's resisting big time.
I'm feeling really down - and my stomach is messed up today. I've been eating really good so I don't think its anything to do with my diet. Unless there was some bad meat in the chef salad I ate last night. That possible I suppose. Feeling sorta nauseous now. And I've been visiting the bathroom many many times this morning.