Should I Believe My Mortgage Company?

AcadiafunJanuary 29, 2014

I paid a month ahead on my mortgage. Thanks to the good advice on this forum I know now not to do this and to pay principal to get ahead.

Here is my question. I have read from other people's accounts that when they paid ahead they did not truly pay ahead according to the bank. That the bank still expected a payment every month.

I called the bank and they told me that my payment is not due until the following month. But I am naturally suspicious that the customer service rep may not be correct.

If she is not correct what type of problems could I run into if I do not send in a payment this month?

Thanks in advance for the advice.

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sushipup1

If you sent in two payments in December and both were applies as payment, then yes, you are also paid for January. Suppose that I was planning a cruise to Antarctica in January, and would be away all month, maybe 6 weeks, then I'd make a payment in advance.

    Bookmark   January 29, 2014 at 1:56PM
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Acadiafun

Thanks sushipup. My lawyer (DH's best friend) dropped in for coffee and he told me I should be fine. Sadly I have lost all faith in banks and tend to worry. Here's why- For example my DD closed an account with a bank. They sent her a 30 cent check back when the account was closed.

Months later she receieved a collection bill from the bank for over $500. They had different explanations as to why this happened such as the account was not closed and she had an auto pay on the account that resulted in the bank trying to pay a bill without sufficient funds and overdraft fees occured. No matter how we tried to resolve it the only way we could was to pay it.

My debit card number was hacked in August. I could not cancel the pending payments until they cleared the bank. The bank insisted on paying them from my money. I filed a police report, provided the out of state addresses that the goods were shipped to and the names of the people who received them. The bank would not recover my money and the police dropped the case. I spent over 20 hours on that with multiple trips to the bank and police, and in the end my money was stolen and the bank was okay with that because it was my money and not theirs.

Sigh......I have trust issues.

    Bookmark   January 29, 2014 at 2:32PM
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kirkhall

Get rid of your debit card. And tell your bank you don't want one issued to you. If they cannot accomodate that, then find a different bank/financial institution that can.

Trust issues. Yes. I understand.

Also, for the first time ever, I received a statement in teh mail this month for my mortgage. Before, they sent payment coupon books (several at a time). Apparently, it is a new federal regulation that they have to send these monthly payment statements. Maybe you'll get one too and it will show your next payment due date (mine is like May of this year...because we are "ahead".)

All well and good though, even if your payment date advances, like mine has, you shouldn't be paying interest in the extra... overall, your total interest paid to your financing institution should be less, as you pay it off sooner.

    Bookmark   January 29, 2014 at 3:33PM
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colorcrazy

Acadi, I m sorry to hear about the mess with your bank (calling it a mix-up is too kind). You might be able to take them to small claims court.

When you make an extra payment on the mortgage, if you want it to only go to principal, make a note on the check. You can also add a sticky or a paper note saying "Check #XXX should be applied to the principal."

This is how we paid our mortgage off early. It took us 19 years, but if we had been smarter, we would have done it earlier; didn't get serious until the last five years when the end was in sight.

Good luck!

    Bookmark   January 31, 2014 at 10:01AM
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raee_gw

Get something in writing (or print!) that shows that they have received your extra payment and applied it to the January payment.

I did run into this once. Sent in an extra payment, but they still insisted that I had to pay the next scheduled payment on the due date. Seemingly they were just going to let that extra payment roam around the books without actually applying it to anything.

    Bookmark   February 2, 2014 at 3:15PM
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Acadiafun

Raee- you have touched the root of my fear because something similiar happened to me. A few years back I paid my car payment 6 months in advance. My statement said I did not owe a payment until that time. Then I got a late notice for not sending in a payment when I skipped one because I was so far in advance. I called and they said even though my statement had a payment due date six months in advance- it really didn't mean that.

I called my mortgage bank and they said they are not expecting a payment until March and that is what my statement says. But because of the whole car payment fiasco I worry. It seems that banks do not have to live by their own rules and getting anyone to "fix" their mistake is impossible. I really don't know why I was so foolish to send in an extra payment because I knew better.

Oh well, I am only sending a principal payment this month and if something happens I will update this thread. Keeping my fingers crossed that payment due date "March 1st" means March 1st.

    Bookmark   February 3, 2014 at 11:31AM
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sushipup1

If you want to avoid confusion, do NOT send in a principle-only payment this month, but add it to your regular March payment. Don't complicate things.

    Bookmark   February 3, 2014 at 12:00PM
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azmom

Each loan is structured differently; some accept principle only payments or /and early regular payments yet some do not. Some accept early payoff, others apply prepayment penalty if loan is paid off shorter than the original loan duration. When you signed a mortgage or loan you also agreed to their rules of payment.

You need to read your mortgage and loan documents in detail when you sign the loan paper, and make the payment accordingly.

Banks and loan institutes have millions borrows, it is unlikely their system is set up to accept payment based on each customer's ever changing, creative payment schedule instead of payment scheduled in the original loan document. The ones accept principle or/and early payments are done because of the loan papers allow it, a note on a stiker only serves as a reminder.

This post was edited by azmom on Tue, Feb 4, 14 at 10:45

    Bookmark   February 4, 2014 at 10:20AM
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Acadiafun

Thanks everyone for the well thought out advice.

    Bookmark   February 7, 2014 at 10:41PM
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joaniepoanie

I just went through this with Wells Fargo. We have decided to throw any extra $ at our mortgage to get it paid off so we can retire sooner than originally planned. We have automatic payments made on the same day each month from OUR bank to WF (as opposed to WF withdrawing the funds from our bank..I want the control).Here is what they said basically...

Suppose your regular monthly payment is $2,000. If in January you send them $4,000 the "computer" reads it as two payments so you would not need to make another payment until March. If you had sent $3500, the computer knows it is extra $ (but not enough for two payments) and applies $1500 to the principle. So, as long as you are sending in less than 2 payments any extra should go to principle....he suggested leaving a $100 buffer, so using this example if you send in $3900 or less, the extra should go to principle.

We have upped our regular payment. In addition, from time to time when we have extra I will just go in to my bill pay and send them extra on different days than our regular payment. I can also log into WF and can see a running statement of how funds are applied and make sure the amounts I want to go to principle are.

    Bookmark   February 8, 2014 at 1:46PM
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raee_gw

It is good, JoaniePoanie, that you checked with WF as to how you can make the extra payments to principal.

AZMom is right, some mortgages simply do not allow prepayments, some will always apply extra payments to interest, others are set up to allow extra payment to principal. We have to know what kind we have.

    Bookmark   February 12, 2014 at 5:02PM
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evaf555

Acadiafun, your story of the hacked debit card illustrates why sometimes it's safer to use an actual credit card. The CC company would have backed you up better.

    Bookmark   February 16, 2014 at 8:20AM
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Acadiafun

Evaf555 you are right and I thank you for mentioning this. I do occaionally use the CC and pay it the same day. I also am now taking cash out for groceries and find I am now the terribly old fashioned lady who gives exact change. Man I used to hate that lady when she was in front of me in line.

Update- It was no problem with the Mortgage company. I am glad there is some flexibility there but won't make that mistake again.

Thanks again for all the great advice.

    Bookmark   February 19, 2014 at 10:58PM
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Chemocurl zn5b/6a Indiana

I also am now taking cash out for groceries and find I am now the terribly old fashioned lady who gives exact change. Man I used to hate that lady when she was in front of me in line.
I'd certainly rather be behind you than some who who is writing a check. It seems that most of them don't start digging for the checkbook and a pen until after they are told the total amount.

Given two lines that appear equal in length and numbers of items, I choose the one with the most men in it. You don't see all that many male check writers, and I've never seen one fumbling/hunting for their checkbook.

Just my 2 cents.

    Bookmark   February 20, 2014 at 2:01PM
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jazziegirlie

I keep track of my mortgage online on the bank's website. I also make my payments there and principal payments when I have extra. I can view where they apply it to to make sure it goes where it is supposed to. They also have an amortization calculator there that I can play with to see how soon my loan would be paid off if I added a certain amount each month for the rest of the time or if I paid a one time amount. It's fun to play with and helps to encourage me to make a plan to pay off sooner and save some interest.

    Bookmark   March 21, 2014 at 3:24PM
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