I am sending weekly mortgage payments to my lender and sent a request in writing instructing them how much to apply to principal, interest and escrow. They accept my payment but hold it in a suspense account until I call when the next payment is due and tell them to apply it. Every time I call they tell me they do not accept partial payments, yet they hold my money without applying it. I do this to make it easier to budget weekly, and was hoping to apply money to the principal to get the amount down weekly. Is it legal for them to hold my money in a suspense account even thought I have instructed them how to apply it? Can they refuse these payments legally? My mortgage payment is always on time and up to date. Can you help?
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Most mortgage companies will not accept weekly or bi-monthly payments unless you sign up and pay them for the privilege. You are lucky they hold the partial payments in a suspense account. Many put the partial payment in the escrow. If you check the fine print in your mortgage paperwork, the monthly payment is covered.
If you wish to pay down the principle faster, add $10 or more to your monthly payment, designating it as extra principle. The will work much better than weekly payments and the mortgage company will accept it without problems.
Oh my goodness... You know, i had thought about doing this before i went to online banking. I had never thought about them not taking the extra payments.
Thanks for the replies. Unfortunately, I guess I did not make myself clear. The mortgage company does not have a "sign up and pay" privilege. As for adding $10 to the monthly payment, I could certainly do that. The point is that it is MUCH easier budgeting out 1/4 of the monthly payment per week than trying not to spend that amount each week, holding onto it to pay the entire amount on the 1st. As for online banking suggestion that is exactly how I am paying right now! The problem is the mortgage company putting the payments in the suspense account instead of appling them to the next months payment. I have spoken to the banking regulation board in my state and was told that no institution can refuse a payment. The mortgage co is not in my state, unfortunately. I have also spoken to numerous supervisors and managers in that company, only to be told the same thing, that they do not accept partial payments. My real question is, Is it legal for them not to apply the payments the way I request to be applied, and is it legal for them not to accept the payments at all.
Most banks and mortage companies will except bi monthly payments when it is applied to the principle.In your post you say you want the mortage company to apply your payment to taxes and interest as well.That may be your problem.When appling extra money to the mortage it should be applied to the principle only.Trying to pay extra money on taxes and interest is costing you money.Also it should be applied just once a month not every week.For example you send in your regular payment on the 1st of the month then a second payment 2 weeks later.I would call back your mortage company and tell or ask them how they want you to make just principle only payments once a month.
We have the same budgeting stratagy, but instead of sending off each check we write weekly, we have a "holding" drawer (or it could be an envelope) where we keep the written checks, and then send them all at one time each month. This will save you postage too.
You could see if they'd let you re-do your mortgage with payments on a weekly basis. My guess would be not, because intrest is generally calculated on a monthly basis. Your mortgage is a contract, and if you want to change it, you might have to go through the process of getting a new mortgage.
It would be better for you to put money each week into some type of savings account... and then pay your mortgage once a month, since your mortgage company wont accept early payments.. At least that way you will be getting interest on your money and also, putting the money aside so you dont spend it.. I use ING, inc... an online bank. I just got a message that any money I put into my account before Apr (I think) I will get 4.75% interest on the savings account. Right now I'm only getting 3.75% with that company... You are not getting any interest on the money you've paid ahead on your mortgage... The bank is just holding it for you without interest... Why do that when you can get another bank to hold it for you with interest.. (smile) Best of luck
PLEASE read this article on bi-weekly mortgage payments. http://tinyurl.com/avsp9 This will answer many questions and show you how you can pay off mortgage faster and save thousands of dollars in interest. Dividing you mortgage payment by 12, and paying that amount extra each month on the principle is the key. Gives you one extra payment every year.
Have you ever heard of the envelope system? This is what my husband and I do every week. We have an envelope for every bill and expense that we have including one for Savings, Emergency, etc. We cash his check every week and put our designated money into it's own envelope. Once you've run out of money in, say your food envelope then you can't go get anymore groceries for that week, if the money is in your mortgage envelope then you can't use it for gas, etc. Hope this helps
I am a banker from Northern MN.
Many mortgage companies and independent companies offer a accelerated mortgage payment program, where you make a bi-weekly pmt rather than a monthly payment. With these companies, the also "hold" your money until they have received 1 months worth of payments and then apply it to the mortgage.
You would be far better off putting the money into a savings account and then writing one check per month, or still write the checks each week and put them aside and send in all of the checks when your mortgage payment is due.
Depending on the type of mortgage that you have, it may have a clause in the mortgage document stating that they will only apply your payments on the 1st day of the month!
Many may say that the mortgage company is trying to make a ton of interest off of your money. While that may be true in some instances, most of the time it is an accounting issue and system issue that will only allow the payments to be posted at a certain time of the month. It is also a accounting NIGHTMARE to have hundred of thousands of payments coming in at different times of the month!
Hope this helps!
Your heading is a bit misleading. It's not that your mortgage company won't accept payments because they are accepting them. They just aren't applying it to your account because they consider it a partial payment. It also seems that you are standing on principle here because you say it's not a problem for you to pay and additional amount on a monthly payment. You just want to know if it's legal to tell you what they have. For that question, you need to contact an attorney - someone who knows the law.
With that said, this is what I did when I owned a house: I took out a 30yr loan. I used a mortgage calculator and based the loan on a 15yr mortgage. You'd be surprised that it doesn't add much more to the monthly payment. Then I divided that amount by the number of weeks in the month. I transferred the weekly amount to a savings account until it came time to pay the mortgage. Then I transferred it back to the checking account and paid the bill. Within 7 years, I had saved 10's of thousands of dollars in interest payments and my loan officer was so surprised and impressed! I did the same thing for property taxes, insurance bills, etc. I can't tell you how many times it saved my but from coming up short at certain times when all bills came due at the same time! Good luck with your problem. Like I said, if you want legal advice - Your best bet is to pay for an attorney.
Is it legal for them to do this? It probably is -- I will echo previous replies and suggest you get an attorney to answer that for you, if you feel it's worth the expense. Even though it must seem to you like the mortgage company people are just being difficult, I'm sure there's at least a grain of truth to the notion that taking multiple payments each month would quickly turn into a bookkeeping nightmare for them. I agree with previous replies -- stash the money away somewhere on a weekly basis, but give it to the mortgage company only once a month, asking to have the extra applied to principal.
In respect to your mortgage company not being in your state, that doesn't matter as I'm pretty sure if they write the mortgage in your state, that contract must abide by state regulations.
As for pre-paying mortgages, I just left this post in another topic on this site. PLEASE READ before deciding to prepay and make your decision wisely.
In some circumstances prepaying your mortgage is not the best option. Currently, the average 30 yr mortgage rates are about 6-6.5%. If you signed a mortgage in the past few years, you may have a rate as low as 4%
Historically, the return on stocks have been about 10% annually. Additionally, since you get to deduct interest you pay on your mortgage, the actual rate of your mortgage would be about 4.6-5% [based on the 6-6.5% mortgage and assuming a 25% tax bracket].
If you have high interest rate CC's or/and high rates on your car, then pre-pay those off, otherwise invest the money, retirement will come quickly and our life expectencies are growing each day.
I am a Mortgage Specialist and an agent for Equity Corp that handles these types of situations. If you would like to learn more, please contact me via email: caseyquel AT hotmail.com
Read the contract (Note) you signed when you took out your mortgage. Specifically a section headed "Borrower's Rights to Prepay". Not only do some lenders not accept prepayments, some actually charge you for them. That is their right, when we sign agreements we are (and should be) bound by them.
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