if you make 2 payments on a home loan and write principal only on one check can the charge interest on it?

Question

I sent in 2 checks to my mortgage company on one I wrote principal only on. They took interest out of both checks. I did not think that was legal for them to do if you are making a principal only payment

Answer 1

I would contact the mortgage holder. Unless you were behind in the payments, they should have applied the principal payment as you directed on your check.

Answer 2

If you sent both of the checks with the same date (or in the same month they SHOULD have taken the 2ND on off of your principal only. Talk to your mortgage company. Many of them have high school grads entering this data, and they don't know what the ins and outs are. It could also be that in the fine print of your contract you are not allowed to make extra payments or pay off early. Either way you need to talk to someone and if it is not a local institution, good luck!!! Many mortgage places sell your paper so many times after a few years you don't know where any of your money is going!

Answer 3

It depends upon the terms of your mortgage, but most lenders do allow paydown of the principal only without an interest penalty. There may have been some confusion, especially if you included two payment slips along with the two checks. Try to contact the lender and see if you can straighten it out over the phone. If the lender doesn't allow prepayment, you do owe the interest.

Answer 4

I don't think you understand how your payments work.

Interest is paid in arrears. That means that for a February payment, you are paying interest for JANUARY.

If you want to pay more money on the principal, This is how it should work (my numbers are rough figures just to keep the numbers even).

Principal balance: $100,000
Monthly principal payment: $100.00
Interest payment: $900.000
So your total monthly pmt: $1,000

When you pay, let's say in February for the P & I for January, you HAVE to pay the $1,000. Let's say you kick in an extra $200 toward principal.

You have Prin Bal: $100,000
Minus Feb prin pmt:-$100
Minus Extra prin pmt: -$200

Then the NEXT month (March) the interest should be calculated on a principal balance of $99, 700 instead of the normal $99, 900.

It will be a few years before you will see the difference...I would wager they appropriated your payments fairly.

Answer 5

Sometimes their computers are not adequately programmed to deal with extra payments .
Some programs post it to the next months payment .
Most check processing is computerized and it just reads account numbers and payment amounts .
Extra notes are for your benefit are rarely read at the business end .

Time to talk to a live person and ask them how long it will take to correctly post the extra payment .

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Answer 6

Well you are taking a chance that whomever physically records your checks does it correctly. Let alone that the lender will allow it. Maybe you should consider a 15 yr mortgage instead. That way you know you payments are being posted correctly.

Answer 7

look at your mortgage agreement................see what you agreed to...........