Paying Mortgage on 1st or before 15th?

When I signed my papers on my house at the title company the agent that did my closing said that I could pay my mortgage before the 15th. I know it's technically due on the 1st but there's a grace period etc so there are no penalties. Do you take a hit on your credit rating if you pay on say the 6th instead of the 1st of each month? I called my lender to ask a generic question and the CSR rep said that my loan was sent to collections becuase I didn't pay on the 1st that month (I called on the 3rd or 4th), I find this to be BS but just checking.

What's printed on your payment coupon? There's usually the 'normal' monthly payment, and a second one listed if paid after a certain date.

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Originally Posted by sammm

What's printed on your payment coupon? There's usually the 'normal' monthly payment, and a second one listed if paid after a certain date.

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1st and after the 15th there's something like a 5% penalty. More or less curious to see if it actually makes a difference if it's paid on the 1st or 14th as far as credit etc goes.

Mine is due the 1st with the penalty kicking in on the 16th. I was told by Chase there was no penalty if it was paid before the penalty date.

I've been paying on or around the 15th for 16 years. ::hal::

Latest credit report showed no dings.

But your mortgage company could be run by evil folks like Titus who are mean an vindictive and live off the fees they can charge you... so YMMV!

It shouldn't matter as long as they have it before the 15th, but you might call your lender and ask them.

When you pay and when they receive and when they post are not necessarily the same day. Even if I do an electronic payment, it takes a few days to show up on Chase's books.

The one that makes me maddest is the old water bill. They mailed them on the first and they were late on the 5th.

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Originally Posted by POS Racing

Mine is due the 1st with the penalty kicking in on the 16th.

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Same here, but with Wells Fargo. Our broker told us it "might" effect our credit a bit if we pay after the first, but probably not. So we've been paying ours "early" most of the time - I will send the payment due on the 1st out on the 15th or so. Makes it much easier for me - no need to worry about it ever being late, and just in case I do need to wait a week or two to pay it, I have that cushion.

Set up an automatic withdraw and never worry about it again.

The issue is now the payment is applied/amortizes. If you're consistent (15th of the month) this doesn't apply, but if you pay on the 5th and then the 1st and then the 10th, it will mess up your amortization schedule.

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Originally Posted by Titus

Set up an automatic withdraw and never have control over your money again.

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fixed!

Sorry, but I've seen these automatic payments go awry numerous times for people, from double-withdrawls to skipped withdrawls that are counted as missed payments, etc. If you have to monitor them anyway, you might as well just manually initiate the transaction and eliminate that risk.

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Originally Posted by goofygrin

The issue is now the payment is applied/amortizes. If you're consistent (15th of the month) this doesn't apply, but if you pay on the 5th and then the 1st and then the 10th, it will mess up your amortization schedule.

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I was wondering about that. The later you pay (or your payment is posted), don't you end up paying more interest?

EDIT - I mean, does less of your payment go towards principal.

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Originally Posted by OZMDD

Sorry, but I've seen these automatic payments go awry numerous times for people, from double-withdrawls to skipped withdrawls that are counted as missed payments, etc. If you have to monitor them anyway, you might as well just manually initiate the transaction and eliminate that risk.

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I've never had a double withdraw, but I've been hit with the missed payment nonsense a few times on my Verizon bill. They always corrected it - at least on my bill, and I never saw it on my credit report - but it wasn't worth the hassle, so I just ended the automatic payments with every company. I *almost* signed up for auto-payment for our car insurances for the discounts, but we save more just paying in full up front anyway.

For most consumer mortgages it doesn't matter if the payment is recieved on the 1st or 15th. They accrue interest monthly, not daily, so no it won't change what goes to principle vs interest.

Paying on the 5th, 6th (or 15th, if allowed by your mortgage company) should not make it onto your credit report. Credit reports deal with 30 + days past due. So unless you're behind by a month you're good. Thats not to say that you wouldn't have a late fee from the bank for paying past the "grace" period, but it shouldn't hit a credit bureau.


Now for the disclaimer...there are still ALOT of interesting mortgage products out there, and smaller lenders or non bank lenders may have different policies, but the above will apply, in general, to most large regional and national banks.

I've been mailing mine around the 1st, and my payment coupon indicates that it's late after the 15th. I hadn't thought about the whole amortization thing. I'll have to go check my past statements and see if I can figure out if there's been any difference how fast the principal's been going down.

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Originally Posted by OZMDD

fixed!

Sorry, but I've seen these automatic payments go awry numerous times for people, from double-withdrawls to skipped withdrawls that are counted as missed payments, etc. If you have to monitor them anyway, you might as well just manually initiate the transaction and eliminate that risk.

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I have been using automatic payroll deposit and automatic mortgage payment withdraws for 13 years without a single problem, although I must admit my employer, checking account bank, and mortgage holder are all one in the same.

Prior to working for the bank, I deposited my checks by hand in a branch each pay period and paid my mortgage with a check in the mail each month. I had one paycheck get deposited in to someone else's account thanks to a dyslexic teller, causing all of my checks to bounce. Lots of fun. I also had a mortgage check get lost when the mortgage company sent an updated payment book and I accidentally used the old one.

My point? People (like the teller and I) make mistakes a lot more often than computer programs. YMMV

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Originally Posted by Titus

My point? People (like the teller and I) make mistakes a lot more often than computer programs. YMMV

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Yea whatever! People program those computer (poorly). ;)

Having been a software developer @ Countrywide (twice! I like beatings), I can attest to the veracity of POS's statement.

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Originally Posted by goofygrin

Having been a software developer @ Countrywide (twice! I like beatings), I can attest to the veracity of POS's statement.

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So it's your fault... We are still working on cleaning up the mess you left behind! ;-)

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Originally Posted by Rebel

For most consumer mortgages it doesn't matter if the payment is recieved on the 1st or 15th. They accrue interest monthly, not daily, so no it won't change what goes to principle vs interest.

Paying on the 5th, 6th (or 15th, if allowed by your mortgage company) should not make it onto your credit report. Credit reports deal with 30 + days past due. So unless you're behind by a month you're good. Thats not to say that you wouldn't have a late fee from the bank for paying past the "grace" period, but it shouldn't hit a credit bureau.


Now for the disclaimer...there are still ALOT of interesting mortgage products out there, and smaller lenders or non bank lenders may have different policies, but the above will apply, in general, to most large regional and national banks.

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Good info. Mine is a run of the mill 30 yr fixed.

I picture some old balding guy in Nevada, TX in his PJ's a 3:30pm with his shaky finger on the keyboard figuring out ways to mess with the "Computer Program"!

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Originally Posted by POS Racing

I picture some old balding guy in Nevada, TX in his PJ's a 3:30pm with his shaky finger on the keyboard figuring out ways to mess with the "Computer"!

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Hey now... I am not nearly as old as you, and I have been completely bald for over a month now thanks to Majik's advice to me to get a Head Blade. ::Banana::

I just happened to be sorting through paper earlier today.... My mortgage had special provisions for the first month (due ON the first) whereas all future payments were due on the first, but not late until the 16th.

You could just have tards like my new lender. My mortgage got sold to a new company and they want to charge me $6 a month to use online payment. Screw that. I mail them a check the 15th or so of the prior month. The largest annoyance is they don't mail me my statement until the 27th or so of every month so i have to use my own envelopes... humbug

Your mortgage paperwork will have the final say on the due and penalty dates. I just finished a re-fi where the payment is due on the 1st and goes past due on the 15th. If they receive the payment any time in that window everything is golden. I don't pay anything on the 1st or 15th - the transaction volume through financial systems go through the roof on those days, and if there's an error I'd just as soon not get caught up in it. I shoot for the 5th to 10th and 20th to 25th for windows to get stuff done.

Having said that, my old mortgage started with countrywide in 2004 with the same 1st/15th rule and some time in 2008, there was a policy change - if the payment was received after the 9th there was an additional fee (but the loan payment still wasn't considered to be late). I forget if this was before or after the BofA acquisition, however. I suspect it had to do with very aggressive cash management practices during the liquidity crisis that brought the banking house of cards to the ground.

I don't believe the lender or servicer is allowed to change the terms of the contract once the contract has been executed, but there are things they can try to do around the periphery in order to nickel and dime you to death.

Chris

Looks like B of A has been busy.....::Rant::

http://redtape.msnbc.com/2011/01/un-...eriod-fee.html

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Some Bank of America mortgage customers will receive an unwelcome Valentine's Day gift when the bank's policy for grace period mortgage payments changes on Feb. 14. Essentially, it means those customers will have six fewer days to pay their mortgage each month without facing additional fees.

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Luckily I don't use BOA, confirmed my grace period is till the 15th

If you have very good credit you should try to get a mortgage with Chase. Your mortgage won't get sold umpteen times.

i wish i could request my mortgage be sold.... lol

I

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If you have very good credit you should try to get a mortgage with Chase. Your mortgage won't get sold umpteen times.

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It probably does, you just don't know it. Most of the major banks sell them off (see the most recent economic meltdown), they just keep the servicing. It appears that it hasn't been sold to the homeowner, but it has. Its why there has been so many problems modifying mortgages since the servicers (ie Chase, BoA, et al) don't actually own the loans anymore.

with Chase you only get to call them once a month to make sure they correctly apply the payment. ugh...