Somewhat Mortgage Related-Amortization Schedule?

cathruggMarch 19, 2009

I am hoping Dave is able to help with this one...(thank you for all that you do in educating and helping everyone here, especially the lurkers who you never "meet".)

Does anyone have or know where I can find an amortization schedule for a mortgage loan that allows me to input random principal payments on dates different from the payment due date?

For example, if the loan payment is due on the 1st of every month and is paid by automatic payment, then I decide to pay an extra $250 on the 7th of this month and then another $750 on the 25th of next month, is there a way to calculate the interest I am saving?

I have searched high and low on the internet without being able to find a spreadsheet that allows for manipulation of the principal payment dates (they all make it payable with the regular due date only).

Thanks in advance for any help!!

cathrugg

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dave_donhoff

Hi Cathrugg,

I have searched high and low on the internet without being able to find a spreadsheet that allows for manipulation of the principal payment dates (they all make it payable with the regular due date only).

This is because any such calculator would be futile. American mortgage loan payments are booked once a month regardless when the payments are sent in (as long as they arrive prior to the late-cutoff deadline.)

Only revolving credit (including HELOCs) have their payments applied toward interest-accruing balances daily (again, in the U.S.)

Does anyone have or know where I can find an amortization schedule for a mortgage loan that allows me to input random principal payments on dates different from the payment due date?

If you'd like to see the effect of differing additional principal payments month-to-month (as opposed to a daily basis,) I can help you with THAT... just email me directly and I'll bounce one right back to you.

For example, if the loan payment is due on the 1st of every month and is paid by automatic payment, then I decide to pay an extra $250 on the 7th of this month and then another $750 on the 25th of next month, is there a way to calculate the interest I am saving?

SO... if you are *REALLY* committed to doing this... the way to do it is to "pay the extra" into an interest-bearing depository account (checking, savings, or other,) and figure the compounding POSITIVE growth of your money... and then subtract it against the negative interest burden you are carrying on your mortgage. Make sense?

Hope that's helpful (and you are completely welcome for any way I could have helped before... your appreciation is appreciated!)

Cheers,
Dave Donhoff
Leverage Planner

    Bookmark   March 19, 2009 at 2:08PM
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cathrugg

Hi Dave,

Thank you so much for your detailed response, you are so helpful and have a wonderful way of explaining it so I can understand.

So you think my "U.S. mortgage" (I laughed when I read that, I don't know why lol) it's not going to matter when I prepay the principal balance as far as daily interest?

Thank you so much for replying so quickly.
Cathrugg

    Bookmark   March 19, 2009 at 3:23PM
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dave_donhoff

Cath,

Right, won't make any difference (as long as you're not late) which day of the month you send your principal prepayment in. Definitely do it in the same envelope as your regular payment though (and mark it specifically as additional principal payment...) else it could complicate the servicing bookkeeping (and NOT in any way that would work to your benefit.)

Luck,
Dave Donhoff
Leverage Planner

    Bookmark   March 19, 2009 at 6:22PM
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brickeyee

"Right, won't make any difference (as long as you're not late) which day of the month you send your principal prepayment in."

I would be on any mortgage servicer that failed to promptly credit an additional principal payment on the day it was received.

It WILL make a small difference in interest costs, since you ARE paying on the outstanding balance every month.
While it is computed a month at a time, additional principal payments change the ratio of principal to interest for EVEY succeeding payment.
It is PITA to compute though.

There is no simple equation that tells what the P&I proportions are for the nth payment.

It is not hard to crate an excel spread sheet that will amortize.

    Bookmark   March 21, 2009 at 4:42PM
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cathrugg

brickeyee--I just heard from my bank, everything Dave said is true. If I want my principal payment "acknowledged" on the day it's made, it must be made on the 1st of the month with my regular payment.

If I make the principal payment on March 27th, it won't be considered until April 1st and my May 1st payment's interest will be adjusted. If I make the principal payment on April 2nd, it won't be considered until May 1st and my June 1st payment's interest will be adjusted.

So, my principal balance does go down the day the payment is posted but it's not recalculated until the first of the month when the computer "looks" at my balance on that day and only that day each month.

They also confirmed Dave's statement about the Excel spreadsheet; it doesn't matter in this case as interest is not computed daily.

Thanks again Dave for your help; if I mistated what you/my bank said, please correct me!

    Bookmark   March 25, 2009 at 9:05AM
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dave_donhoff

Hi Cathrugg,

Newp... you understood it all just right.

I'm gradually accepting the sometime-realities of community board interactions;

Cheers,
Dave Donhoff
Leverage Planner

    Bookmark   March 25, 2009 at 2:36PM
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cathrugg

OMG Dave, you are really the BEST!!!!! Thank you for making my day. :o)

    Bookmark   March 25, 2009 at 4:00PM
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