# Making advance mortgage payments



## pickapeppa (Jan 1, 2005)

Someone on another forum mentioned this awhile back and I thought 'it must be nice to be able to make a year's mortgage payments in advance', but now I'm thinking it's a brilliant idea. Even a few months in advance could make a big difference in the end of this cycle if it turns around before you start getting bills with an actual amount due.

When talking with our loan holders, what they do is apply the amount to your principle, but you'll get bills with $0 amount due until your excess is used up by nonpayment.

Sounds good to me! Maybe it's time to start thinking about running a credit on the mortgage balance.


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## 7.62mmFMJ (Nov 19, 2008)

The principle balance does disappear quickly that way.

However, you may want to ask the mortgage holder if you can actually not pay for an extended period of time even if you are "ahead."


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## Bearfootfarm (Jul 13, 2006)

It's always a good idea to make extra payments, but many lenders's wont let you "pay in advance", and expect a payment every month, no matter how much EXTRA you pay.

If your lender wont allow "paying ahead", as such, you could always put the money in a checking account and have automatic withdrawals.


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## pickapeppa (Jan 1, 2005)

We have two other loans out that they allowed us to pay ahead, and that was their policy. They're all from different lenders, so I'll have to call the bank who holds the mortgage to find out theirs to be 100% sure. I'm hoping they say the same thing.

I think any bank would be hard pressed to turn down extra money right now, but you never know.

Nobody will call us back on a 15-year fixed refi for a lower rate, so this is going to be my little protest.

:flame:


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## PlainFolk (Apr 10, 2005)

I called my mortgage company to find out if I could make extra payments in order to get ahead on the payments and they told me that I had to send a letter with the payment explaining what it is I am wanting to do, otherwise they would apply it towards the principle.


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## Terri (May 10, 2002)

I have one mortgage on my home, and another mortgage on 5 acres outside of town. 

One mortgage company will apply it to the principal and still expect payments unless I send in the letter, and the other mortgage holder will expect zero payments because I am ahead. So, they do not all do the same thing!!!!!!!!!


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## mnn2501 (Apr 2, 2008)

pickapeppa said:


> When talking with our loan holders, what they do is apply the amount to your principle, but you'll get bills with $0 amount due until your excess is used up by nonpayment.
> .


 Keep an eye on your monthly statements. I always pay extra, however each month my normal payment is still due in full.

The extra I pay goes straight to the Principle balance thus I will be paying off the loan early.


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## elkhound (May 30, 2006)

i paid my homestead off in 2007.i would not get the loan unless it was where there was no penalty for early pay off and also able to pay on principle alone and not my monthly payments.i paid my loan off 5 years earlt this way.they only got me for 10 years of interest....ughhhhhhh.

also there is one thing you can do for your loan.rate modification change....do this instead of refinance and it will be cheaper.5 years into my loan i was going to refinance to the tune of $3000 for lawyers and the hoopla again.well i broguht up the rate mod change and i keep my same morgage and t he % in interest only changed....AND ...it only cost me $186 to do it.the last part of my morgage went so fast and easy when i was able to cut 3% off my paid interest.hope this helps.


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## Cabin Fever (May 10, 2002)

Making payments in advance doesn't sound like a good idea to me if all the bank does is hold the money and then applies it to both princiipal and interest if and when you don't make a regular payment. If this is all the bank does, it would be better to put the extra payments in a savings account yourself and at least collect a little interest on the money. Then, when there is a month that you can't make the payment for whatever reason, take the money out of the account to make the payment.

With that said, paying down the principal early makes all the sense in the world.


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## pickapeppa (Jan 1, 2005)

Cabin Fever said:


> Making payments in advance doesn't sound like a good idea to me if all the bank does is hold the money and then applies it to both princiipal and interest if and when you don't make a regular payment. If this is all the bank does, it would be better to put the extra payments in a savings account yourself and at least collect a little interest on the money. Then, when there is a month that you can't make the payment for whatever reason, take the money out of the account to make the payment.
> 
> With that said, paying down the principal early makes all the sense in the world.


On the other loans, the extra does get applied toward principle, but also gives you a $0 balance due. 

I'm still surprised nobody has called to give us a refi. It's not like we're a high risk mortgage holder, good credit, on time payments for over ten years, paid off credit cards, stable work and resident history. It's really odd. This is twice now I've sent info out to look into financing and have gotten no responses back, no return phone calls, nada.

Cash is definitely king in this climate. Prices will only continue to fall until the banks start making loans again.


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## pickapeppa (Jan 1, 2005)

rose2005 said:


> If your bank allows you to, it is a really good thing to pay your mortgage payent weekly, a month in advance. It really cuts down on the interest. We do this.
> 
> Plus if you can, it is a good idea to always have at least 3 months mortgage payments in reserve just in case.
> 
> Rose


This is good idea. I'd forgotten about that method.


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## pickapeppa (Jan 1, 2005)

elkhound said:


> also there is one thing you can do for your loan.rate modification change....do this instead of refinance and it will be cheaper.5 years into my loan i was going to refinance to the tune of $3000 for lawyers and the hoopla again.well i broguht up the rate mod change and i keep my same morgage and t he % in interest only changed....AND ...it only cost me $186 to do it.the last part of my morgage went so fast and easy when i was able to cut 3% off my paid interest.hope this helps.


I will look into this. Thanks for letting me know about it. I had no idea they'd do a rate mod change for someone who wasn't in trouble with their payments.


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## unregistered29228 (Jan 9, 2008)

pickapeppa said:


> This is twice now I've sent info out to look into financing and have gotten no responses back, no return phone calls, nada.


Same here - we've applied 2 or 3 times to places like Lending Tree and no responses at all. 

We also pay extra on the principle each month, which really does save money at the end of the loan.


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## CindyLou62 (Aug 22, 2008)

My home is paid for and I have excellent credit. Owe no one anything except on my sister's house. I can't get anyone to refi our second home because I only want $43k. They want you to at least borrow $80k.


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## travlnusa (Dec 12, 2004)

CindyLou62 said:


> My home is paid for and I have excellent credit. Owe no one anything except on my sister's house. I can't get anyone to refi our second home because I only want $43k. They want you to at least borrow $80k.



Not sure if you can, but why not take your loan for $80K, and then on payment #1, send in $37K?


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## Space Cowboy (Apr 26, 2008)

I've been thinking about this for quite some time now. 

Do I make some large payments to pay down the mortgage, or hold on to my money in the bank and make a complete payoff payment later?

Well, I finally decided to hold on to the money in savings and payoff all at once. If (when) the economy goes bad, I would rather have the money in savings and can apply it where needed.

I guess my biggest fear is to pay off these "chunks" and when things go bad, I don't have the cash to make the monthly payments and lose everything.

SC


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## Elizabeth (Jun 4, 2002)

I'm all for paying off the mortgage early, any way you can if the mortgage lender allows it. One caveat though- years ago I had a huge mortgage on a house and 15 acres of land. I decided to get serious about paying of the loan and started sending in extra cash whenever I finished a freelance gig. I was sending in $10-20,000 at a time and having it applied to my principle. That worked really well but I left myself short on cash. At one point I did a big job for BET (television) and got stiffed- I had to hire a lawyer and eventually got paid 3 months later, but in the meantime I was short on cash and had to scramble to pay my bills. I called my mortgage company and told them that I had just recently sent in a payment for $23,000, explained my situation, and asked if $1500 of that could be redistributed towards my payment for that month. Nope- send in a payment or we will start foreclosure proceedings. They couldn't care less about my problem- just send more $$$$.

I got the payment in, eventually paid off the mortgage, and I hope I never have another mortgage again in my life.

So, even if you are making extra payments, don't forget to keep 3 months or so of cash in reserve- just in case.


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## pickapeppa (Jan 1, 2005)

Space Cowboy said:


> I've been thinking about this for quite some time now.
> 
> Do I make some large payments to pay down the mortgage, or hold on to my money in the bank and make a complete payoff payment later?
> 
> ...


This is the same decision I've been battling with for about a year now, knowing we were heading for a pretty big fall.

Maybe we'll do both, but just less of each.


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## francismilker (Jan 12, 2006)

I've heard before some statitics on paying just one extra payment per year applied to the principal will cut a 30 year mortgage down several years. Does anyone have any data to support this idea?
I've got a ten year mortgage and am currently paying an extra $100 per month but don't know how much it's helping.


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## stranger (Feb 24, 2008)

read your mortgage contract, you'll probably be allowed to pay the whole thing and as many payment on the princible as you want, but you'll have to make an interest payment every month.


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## stranger (Feb 24, 2008)

okie said:


> I've heard before some statitics on paying just one extra payment per year applied to the principal will cut a 30 year mortgage down several years. Does anyone have any data to support this idea?
> I've got a ten year mortgage and am currently paying an extra $100 per month but don't know how much it's helping.


 is't helping, every 12 months, you've knocked off 1200.


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## Riverdale (Jan 20, 2008)

The best thing for you to do is make 1/2 payment every two weeks (NOT twice a month). If you do this, you will be making 13 payments per year, rather than 12. This knocks 8 years off a 30 mortgage.

Add an extra $30 per and you knock off another 2 years.

Be smart


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## Ann-NWIowa (Sep 28, 2002)

When we had a SBA disaster mortgage they allowed us to pay ahead. Then they told us we couldn't do that any more and when we were even date they sold the mortgage to another company. 

I think I would want to have an emergency fund equal to at least six months in the bank before I started throwing large sums at a mortgage. Our mortgage was due to mature in 11/09 and I paid it off in 3/07 primarily by paying an extra $100 a month over a 10 year period.


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## Space Cowboy (Apr 26, 2008)

3 to 6 months payments is a good plan *in normal times*. The Great Depression lasted over a decade. I've heard too many descriptions of our current "economic crisis" to believe this will be short lived.

SC


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