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Why is my bank applying my extra payments to future months?

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sendspamhere4959 Joined: 21 Dec 2011 Posts: 2 7.60 Dollars($)	Posted: Wed Dec 21, 2011 8:45 pm    Post subject: Why is my bank applying my extra payments to future months? Like 0 Dislike 0 Please tell me if my bank is giving me the shaft because I am trying to pay down my mortgage faster. Here are the details: Principal & Interest $387.13 Escrow $155.85 Interest Rate 3.000% Next Payment Amount: $542.98 Payment Due Date: 02/01/2012 I started making a $1500 payment on the due date since 9/30/2011. It appears that my bank credited the account for two months and took out interest for those months. The rest of it went to the principal. Then the next month I submitted another $1500 payment, it looks like it went all to principal with no interest taken out. I think it will continue on this cycle but I am not sure yet. If it does continue on that cycle, is that a problem? Or should they only be taking the interest for one month and the rest should go to principal every month? Please take a look at my statement and let me know if I need to do something different. Thank you very mucy for your time and advice. http://img214.imageshack.us/img214/9991/statement.jpg
adonis Joined: 22 Oct 2005 Posts: 10562 Location: ALASKA 1089.18 Dollars($)	Posted: Thu Dec 22, 2011 12:28 am    Post subject: Like 0 Dislike 0 Hi, The money paid by you should go equally towards the principal amount as well as the interest. If the lender utilizes the whole money toward principal, then you will remain liable for the interest payments in full. It will be better if you could contact a mortgage lawyer and take his opinion in this matter. _________________ Procrastination is the enemy of your financial success
chrisgummerson Community Expert Joined: 29 Apr 2010 Posts: 704 Location: La Palma, CA 9.98 Dollars($)	Posted: Thu Dec 22, 2011 1:01 pm    Post subject: Like 0 Dislike 0 You should write seperate checks, one for your mortgage payment, and one for extra principal reduction. On your check write for Principal Reduction Payment Only. Good luck _________________ Chris Gummerson Bay Valley Mortgage Group bayvalleymortgage.com 714-367-5125
sendspamhere4959 Joined: 21 Dec 2011 Posts: 2 7.60 Dollars($)	Posted: Thu Dec 22, 2011 10:45 pm    Post subject: Like 0 Dislike 0 Thanks Chris for the tip. I will need to figure out how to do that because the payment comes from one bank to the other bank electronically. It does not allow me to change the sending option and it will not allow for a description on what to do with the payment. I guess I can do it the old fashion way but I way too lazy for that...
gmakerley Community Mentor Joined: 09 Nov 2007 Posts: 12376 Location: bloomfield, ct 58.49 Dollars($)	Posted: Wed Jan 04, 2012 12:54 pm    Post subject: Like 0 Dislike 0 Adonis, I'm afraid your answer scares me. For the money to be spread equally between principal and interest would be counterproductive, as well as contrary to how a mortgage loan gets repaid. Generally, all excess dollars over and above the regular monthly mortgage payment ought to be applied to the principal balance, which subsequently will reduce the amount of interest charged in the next month, and so on and so on... Equal distribution would not accomplish what our poster is attempting to do, and what you've described may well confuse a great many who wish to prepay principal on their mortgages. _________________ George M. Akerley Mortgage Underwriter/Consultant Word of Excellence- Writing/Editing/Proofreading 860-221-5044
thisonelife Guest	Posted: Sun Feb 05, 2012 11:38 pm    Post subject: Like 0 Dislike 0 I've seen it a few times where the extra is held in 'suspense' until a full regularly monthly payment is accrued, I'm not sure why but sometimes it does not get applied to principal, but if you call in you can get the extra applied to principal if you notice it is not
gmakerley Community Mentor Joined: 09 Nov 2007 Posts: 12376 Location: bloomfield, ct 58.49 Dollars($)	Posted: Mon Feb 06, 2012 12:53 pm    Post subject: Like 0 Dislike 0 "thisonelife": are you indicating that sums of money that are to be applied as "principal only" on a loan are held in suspense? If that's what you've seen happen - even once - you need to bring it to the attention of the overseers of the lending institutions that are doing it. This is not legal practice - any sum requested by a borrower to be applied to principal must be applied in such a fashion - that's the rules. _________________ George M. Akerley Mortgage Underwriter/Consultant Word of Excellence- Writing/Editing/Proofreading 860-221-5044
Cynthia Guest	Posted: Thu Mar 01, 2012 10:04 am    Post subject: My lender putting extra prinicpal to suspense account Like 0 Dislike 0 George, My lender is in CA and has not put my additional paymetns toward principal. I have clearly marked on my check and in a letter to them that I want all the extra payment applied to principal. I hhave called every month and they say they don't know whay it is not being applied as requested. Nothing changes. What next? a lawyer? BTW I no longer get statements as I had filed and received bankruptcy discharge.
smithsussane Joined: 18 Sep 2008 Posts: 10439 Location: Alaska 985.83 Dollars($)	Posted: Fri Mar 02, 2012 1:47 am    Post subject: Like 0 Dislike 0 Hi Cynthia! Welcome to forums! If you have received a discharge from that loan in your bankruptcy filing, then you're not liable for the mortgage payments. Moreover, the lender won't be able to put extra principal to suspense account. You should contact your bankruptcy attorney and take his opinion in this matter. Feel free to ask if you've further queries. Sussane

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