Progress to Date

  • Original Loan Amount: $204,000.00
  • Balance at Beginning of 5-year Goal (1/1/08): $188,983.82 @ 6.00%
  • Balance at Refinance in February 2009: $148,000.00 @ 4.625%
  • Outstanding Balance: $0.00 (PAID IN FULL!!!)
  • Latest Payment Date: April 2011
  • Latest Additional Principal Amount: $17,623.22
  • Amount Ahead of Schedule (since refinance): $121,462
  • Time Ahead of Schedule (since refinance): 7 years 10 months
  • Interest Saved Last Month: $23,972.48
  • Total Interest Saved: $28,435.55 ($1,037.74 on original mortgage; $27,397.81 on current mortgage)
  • Months Remaining in 5-year Goal: 20
  • Average Monthly Principal Needed to Meet Goal: N/A (Goal achieved)
  • Progress List Explained

Monday, August 4, 2008

One Week Too Late?

So, as I predicted in my previous entry, my wife's paycheck was in the mail today. She dropped it off at the bank this afternoon. I scheduled an extra principal payment of $1,500 to occur by the end of the week. I won't know whether the lender will apply it to the balance in July or August until we receive the August statement. And that won't happen until I send the standard payment for August (which probably won't happen until the last week of the month).

My prediction is that they will consider it part of our August payment, since we've already received the statement for July. But I'll be pleasantly surprised if they honor the 15-day grace period and credit it retroactively to the July balance. More to come on this in about a month.


change is a good thing said...

I'm curious to hear how they apply it as well. That's great to add another $1500 to the reduction of your debt regardless of how they apply it. Great job!!

Anonymous said...

I am curious, does the timing of extra payments within a particular month affect how the interest is calcuated? I am planning to send in extra payment as my budget allows and was wondering when I should try to send the payments?

The Executioner said...

Change, thanks again for your kind words. You are doing a great job of keeping me motivated here.

Anonymous, I'm not sure how your mortgage is structured so I can't tell you a straight answer. I live in the US and have a pretty standard fixed-rate mortgage. For me, there is no difference in interest paid if I send the payment on the first of the month or the last of the month. For that reason, I tend to wait and send the payment closer to the due date. The same is true for extra principal payments. While it does matter which month your extra payment gets credited toward, it doesn't matter when in the month they apply the payment. August is just August, there is no smaller division of time involved when calculating interest charges.

A good article that I've referenced before on my blog is here. It's pretty short, but helpful. See the section about "Extra Principal Payments" for details on your question.

Double said...

Paying off your mortgage as quickly as possible is a sure path to prosperity. Personally I am counting down the end to riddance of my mortgage. Countdown is 2yr 9months.

Anonymous said...

Thanks for the link to the article on extra payments-- I have a fixed rate 5.5% mortgage that I hope to pay off within 5 years as well--this article and the calculators will be helpful.