I have a loan and the payment works out as I have calculated however when I made my first payment a much larger portion went to interest than what I calculated. I went to several websites and they all calculated the same amounts as I did as to the amount of interest and principal that should be applied with each payment... the guy at the bank couldn't explain it. My concern is that I want to pay the loan off early and I don't want wasted payments going to interest when they are supposed to pay down the principal.
2006-11-24 14:09:12 · 5 answers · asked by kelvy107 3 in Business & Finance ➔ Credit
This isn't a mortgage it is a debt consolidation loan.
2006-11-24 14:24:07 · update #1
One of the possible reasons is that the interest for the period between your actual *loan closing day* and *the day your loan account begins* should have been added to your very first monthly payment.
Starting from your 2nd payment any online amortization calculator must show the correct interest part.
2006-11-26 04:55:38 · answer #1 · answered by Drink Wine 1 · 0⤊ 0⤋
You are paying interest first. One way to drop your amount of interest is to pay more than due monthly. Make the regular payment and send extra a couple of weeks later, writing on the check "Towards principal only". Make sure it is applied that way by contacting them. Don't let them tell you they can't do that unless it is specifically written into the terms of the loan that interest is paid first.
2006-11-24 18:10:32 · answer #2 · answered by Joe S 6 · 0⤊ 0⤋
The loan company will apply your payment in the following order:
1. Unpaid interest, accumulated since your previous payment
2. Required escrows
3. Principal
If your payment is due on the First, and they received your payment on the Second, you paid one more day of interest than your amortization shows. At 7% annually, that's about $19.00 per $100k.
2006-11-24 14:21:04 · answer #3 · answered by open4one 7 · 0⤊ 0⤋
Are taxes and insurance being included in the mortgage payment?
This would account for the note being much higher than you anticipated because you have an escrow account for taxes and insuance built into the mortgage
2006-11-24 14:13:30 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Insist that the bank find someone who will explain precisely how the bank did its interest calculation. I'm not surprised that one bank employee can't explain it, but certainly there is someone there who can.
2006-11-24 14:21:09 · answer #5 · answered by fcas80 7 · 0⤊ 0⤋