Q: I have a mortgage question. Is it legal for a mortgage company to apply your mortgage payment automatically to the principal, even if you specify your payment should be a particular monthly mortgage payment?
My lender does this to me whenever I send my payment in early for the next coming month. Then I get hit with a delinquent notice, stating that I did not pay my mortgage. I have to call them up and have them apply my payment to the mortgage, not the principal.
I was told that if I send the payment within 15 days of the due date (the first of each month), the system will automatically bill it to the mortgage. Anytime before that, it will put it towards the principal. I have yet to see this policy in writing.
My payment stub only states the amount to be paid. There is no blank line for an extra amount to be paid toward the principal. It is aggravating, not to say the least about how they can mess up my credit rating!
Is there anything I can do about this?
A: What they are doing is legal. You can’t pre-pay your actual monthly mortgage payments. If those arrive too early, they are deemed to have been extra payments to be applied toward the principal of the mortgage.
Please make your regular mortgage payments on time. If you want to avoid problems like this in the future, ask your lender to automatically debit your checking account for your mortgage payment. Then, anything you send in will automatically be credited toward paying down the loan balance.
March 1, 2001.