Courtesy Calls from Wells Fargo aka Shitheads

[Anonymous]

Anonymous wrote:Somebody who knows a lot about the mortgage business once told me, why let them earn interest on your money for two weeks (between the 1st and the 15th), when you can earn this interest on your money for two weeks.

They are already earning interest on your money for those two weeks, since it is calculated on the amount you still owe them. If you pay them earlier, then they don't earn as much interest on the reduced principal. Unless your money is earning interest at a higher rate than your mortgage, waiting to pay it costs you more than it earns.

[Anonymous]

Anonymous wrote:Aren't you accruing more interest when you pay late? I think on mine the balance between principal and interest changes depending on the date of payment. This is why some people actually pay 2x/month rather than once. So you can do what you want but be aware that it is costing you money in the long run.

You pay your mortgage interest arrears. So when you make your payment on the 1st of each month, you are paying the previous month's interest. That is why the bank is eager to get their payments. They can not add interest during the grace period.

The 'bimonthly' payment option is commonly a bi-weekly payment option. You pay an extra month each year, so it accelerates the payoff. It is a pseudo bi-weekly plan because the bank still only calculates the principle/interest once a month. Not sure how many banks offer true bi-weekly or bi-monthly plans (calculates every 14 or 15 days).

[Anonymous]

Anonymous wrote:

Anonymous wrote:Somebody who knows a lot about the mortgage business once told me, why let them earn interest on your money for two weeks (between the 1st and the 15th), when you can earn this interest on your money for two weeks.

They are already earning interest on your money for those two weeks, since it is calculated on the amount you still owe them. If you pay them earlier, then they don't earn as much interest on the reduced principal. Unless your money is earning interest at a higher rate than your mortgage, waiting to pay it costs you more than it earns.

Yes, I am paying interest to them for the life of the mortgage. But this interest is already figured into my monthly payment amount and is independent of when during the month I pay the bill. We have a fixed interest rate mortgage. I could save on interest charges if I paid the whole thing off 20 years early. But in the absence of doing that, the monthly payment amount was determined when the mortgage was made, and it doesn't drop from $3,500 to $3,300 (made up numbers) if I pay the monthly bill on day 1 instead of day 15, nor does the total number of payments over 30 years fall.

So why let Wells Fargo earn interest *twice* on cash that could sit in their bank vs. sit in my bank.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It has nothing to do with not being able to afford, etc., one is paying within the terms of the contract, which says one can pay anytime prior to the 16th with no penalty.

There won't be any late fees charged, but there is a strong possibility you are raising the total cost of the loan by adding extra interest charges for those days past the due date. I don't think I'd use "no penalty" if it makes you pay more money in the long run.

Not true for most cases. Only if you have a simple-interest loan, which has no grace period.

[Anonymous]

Anonymous wrote:You pay your mortgage interest arrears. So when you make your payment on the 1st of each month, you are paying the previous month's interest. That is why the bank is eager to get their payments. They can not add interest during the grace period.

The 'bimonthly' payment option is commonly a bi-weekly payment option. You pay an extra month each year, so it accelerates the payoff. It is a pseudo bi-weekly plan because the bank still only calculates the principle/interest once a month. Not sure how many banks offer true bi-weekly or bi-monthly plans (calculates every 14 or 15 days).

You are not entirely correct. Yes, you pay interest in arrears. On the first of the month, you would pay the interest generated on the previous payment period(Let's say it was 30 days). The remainder of your payment goes to the principal. If you pay on the 15th, interest still accrues on the entire amount from the 1st through the 15th, just as it would if you paid on the 1st. The difference is that your payment has not been applied, so the principal has not been reduced by the amount of your payment. Over the course of years, that additional amount will add up, increasing the total cost of the loan.

This may not be true for every loan, but if it is a simple interest loan, the most common type, than that is the way it operates. The "grace period" has no affect on how the interest accrues, it only affects when late fees are applied. Normal interest is not a late fee.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Somebody who knows a lot about the mortgage business once told me, why let them earn interest on your money for two weeks (between the 1st and the 15th), when you can earn this interest on your money for two weeks.

They are already earning interest on your money for those two weeks, since it is calculated on the amount you still owe them. If you pay them earlier, then they don't earn as much interest on the reduced principal. Unless your money is earning interest at a higher rate than your mortgage, waiting to pay it costs you more than it earns.

Yes, I am paying interest to them for the life of the mortgage. But this interest is already figured into my monthly payment amount and is independent of when during the month I pay the bill. We have a fixed interest rate mortgage. I could save on interest charges if I paid the whole thing off 20 years early. But in the absence of doing that, the monthly payment amount was determined when the mortgage was made, and it doesn't drop from $3,500 to $3,300 (made up numbers) if I pay the monthly bill on day 1 instead of day 15, nor does the total number of payments over 30 years fall.

So why let Wells Fargo earn interest *twice* on cash that could sit in their bank vs. sit in my bank.

exactly...

I'm paying off additional principal early and also paying around the 5th of the month, and it's not going to cost me anything more in the long run... with the prepayments of principal a 30 yr. loan will turn into less than a 20 yr.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You pay your mortgage interest arrears. So when you make your payment on the 1st of each month, you are paying the previous month's interest. That is why the bank is eager to get their payments. They can not add interest during the grace period.

The 'bimonthly' payment option is commonly a bi-weekly payment option. You pay an extra month each year, so it accelerates the payoff. It is a pseudo bi-weekly plan because the bank still only calculates the principle/interest once a month. Not sure how many banks offer true bi-weekly or bi-monthly plans (calculates every 14 or 15 days).

You are not entirely correct. Yes, you pay interest in arrears. On the first of the month, you would pay the interest generated on the previous payment period(Let's say it was 30 days). The remainder of your payment goes to the principal. If you pay on the 15th, interest still accrues on the entire amount from the 1st through the 15th, just as it would if you paid on the 1st. The difference is that your payment has not been applied, so the principal has not been reduced by the amount of your payment. Over the course of years, that additional amount will add up, increasing the total cost of the loan.

This may not be true for every loan, but if it is a simple interest loan, the most common type, than that is the way it operates. The "grace period" has no affect on how the interest accrues, it only affects when late fees are applied. Normal interest is not a late fee.

Then why doesn't the monthly payment amount ever change (apart from escrow and tax changes)? You'd think that people who always pay on the 1st would have lower monthly payments than people who pay on the 15th, for the same initial principal. But you don't see this happen.

[Anonymous]

Definition of 'Grace Period'

A provision in most loan and insurance contracts which allows payment to be received for a certain period of time after the actual due date. During this period no late fees will be charged, and the late payment will not result in default or cancellation of the loan. A typical grace period is 15 days.

Investopedia explains 'Grace Period'

A grace period is usually the only a feature of a loan on which interest is calculated monthly, if it is calculated at all. Under some loan contracts, payments outstanding during grace periods are interest free, but the majority have interest compounding during the grace period. Be sure to check your loan contract for the specifics on any grace periods.

Credit cards for example, on which interest is calculated daily, do not have any grace periods.

Read more: http://www.investopedia.com/terms/g/grace_period.asp#ixzz1wTBCdpq1

[Anonymous]

Most mortgage loans are calculated monthly. They are not simple interest loans, which are calculated daily.

Anonymous wrote:

Anonymous wrote:You pay your mortgage interest arrears. So when you make your payment on the 1st of each month, you are paying the previous month's interest. That is why the bank is eager to get their payments. They can not add interest during the grace period.

The 'bimonthly' payment option is commonly a bi-weekly payment option. You pay an extra month each year, so it accelerates the payoff. It is a pseudo bi-weekly plan because the bank still only calculates the principle/interest once a month. Not sure how many banks offer true bi-weekly or bi-monthly plans (calculates every 14 or 15 days).

You are not entirely correct. Yes, you pay interest in arrears. On the first of the month, you would pay the interest generated on the previous payment period(Let's say it was 30 days). The remainder of your payment goes to the principal. If you pay on the 15th, interest still accrues on the entire amount from the 1st through the 15th, just as it would if you paid on the 1st. The difference is that your payment has not been applied, so the principal has not been reduced by the amount of your payment. Over the course of years, that additional amount will add up, increasing the total cost of the loan.

This may not be true for every loan, but if it is a simple interest loan, the most common type, than that is the way it operates. The "grace period" has no affect on how the interest accrues, it only affects when late fees are applied. Normal interest is not a late fee.

[Anonymous]

Anonymous wrote:Definition of 'Grace Period'

A provision in most loan and insurance contracts which allows payment to be received for a certain period of time after the actual due date. During this period no late fees will be charged, and the late payment will not result in default or cancellation of the loan. A typical grace period is 15 days.

Investopedia explains 'Grace Period'

A grace period is usually the only a feature of a loan on which interest is calculated monthly, if it is calculated at all. Under some loan contracts, payments outstanding during grace periods are interest free, but the majority have interest compounding during the grace period. Be sure to check your loan contract for the specifics on any grace periods.

Credit cards for example, on which interest is calculated daily, do not have any grace periods.

Read more: http://www.investopedia.com/terms/g/grace_period.asp#ixzz1wTBCdpq1

But for your basic fixed rate mortgage, I'm guessing, no interest is calculated during the grace period. Otherwise some lawyer would have explained this during closing and DH and I, who both get finance pretty well, would have paid attention. Instead we haven't been concerned about paying on the 1st but, like the other poster, are paying more each month.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You pay your mortgage interest arrears. So when you make your payment on the 1st of each month, you are paying the previous month's interest. That is why the bank is eager to get their payments. They can not add interest during the grace period.

The 'bimonthly' payment option is commonly a bi-weekly payment option. You pay an extra month each year, so it accelerates the payoff. It is a pseudo bi-weekly plan because the bank still only calculates the principle/interest once a month. Not sure how many banks offer true bi-weekly or bi-monthly plans (calculates every 14 or 15 days).

You are not entirely correct. Yes, you pay interest in arrears. On the first of the month, you would pay the interest generated on the previous payment period(Let's say it was 30 days). The remainder of your payment goes to the principal. If you pay on the 15th, interest still accrues on the entire amount from the 1st through the 15th, just as it would if you paid on the 1st. The difference is that your payment has not been applied, so the principal has not been reduced by the amount of your payment. Over the course of years, that additional amount will add up, increasing the total cost of the loan.

This may not be true for every loan, but if it is a simple interest loan, the most common type, than that is the way it operates. The "grace period" has no affect on how the interest accrues, it only affects when late fees are applied. Normal interest is not a late fee.

Then why doesn't the monthly payment amount ever change (apart from escrow and tax changes)? You'd think that people who always pay on the 1st would have lower monthly payments than people who pay on the 15th, for the same initial principal. But you don't see this happen.

It doesnt affect your payment, but will affect the payoff date. The more interest you accrue the longer it will take to pay off the loan (could be longer than the loan term).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You pay your mortgage interest arrears. So when you make your payment on the 1st of each month, you are paying the previous month's interest. That is why the bank is eager to get their payments. They can not add interest during the grace period.

The 'bimonthly' payment option is commonly a bi-weekly payment option. You pay an extra month each year, so it accelerates the payoff. It is a pseudo bi-weekly plan because the bank still only calculates the principle/interest once a month. Not sure how many banks offer true bi-weekly or bi-monthly plans (calculates every 14 or 15 days).

You are not entirely correct. Yes, you pay interest in arrears. On the first of the month, you would pay the interest generated on the previous payment period(Let's say it was 30 days). The remainder of your payment goes to the principal. If you pay on the 15th, interest still accrues on the entire amount from the 1st through the 15th, just as it would if you paid on the 1st. The difference is that your payment has not been applied, so the principal has not been reduced by the amount of your payment. Over the course of years, that additional amount will add up, increasing the total cost of the loan.

This may not be true for every loan, but if it is a simple interest loan, the most common type, than that is the way it operates. The "grace period" has no affect on how the interest accrues, it only affects when late fees are applied. Normal interest is not a late fee.

Then why doesn't the monthly payment amount ever change (apart from escrow and tax changes)? You'd think that people who always pay on the 1st would have lower monthly payments than people who pay on the 15th, for the same initial principal. But you don't see this happen.

It doesnt affect your payment, but will affect the payoff date. The more interest you accrue the longer it will take to pay off the loan (could be longer than the loan term).

If interest is calculated monthly, there would be no difference in payoff dates.

[Anonymous]

So do we have some sort of consensus here? Pay your credit card on the 1st of the month, but pay your fixed-rate mortgage any time between the 1st and the 15th?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Definition of 'Grace Period'

A provision in most loan and insurance contracts which allows payment to be received for a certain period of time after the actual due date. During this period no late fees will be charged, and the late payment will not result in default or cancellation of the loan. A typical grace period is 15 days.

Investopedia explains 'Grace Period'

A grace period is usually the only a feature of a loan on which interest is calculated monthly, if it is calculated at all. Under some loan contracts, payments outstanding during grace periods are interest free, but the majority have interest compounding during the grace period. Be sure to check your loan contract for the specifics on any grace periods.

Credit cards for example, on which interest is calculated daily, do not have any grace periods.

Read more: http://www.investopedia.com/terms/g/grace_period.asp#ixzz1wTBCdpq1

But for your basic fixed rate mortgage, I'm guessing, no interest is calculated during the grace period. Otherwise some lawyer would have explained this during closing and DH and I, who both get finance pretty well, would have paid attention. Instead we haven't been concerned about paying on the 1st but, like the other poster, are paying more each month.

You are one of the few intelligent people on here. Good grief, no wonder why so many people have defaulted on their loans, idiots are abundant. 13:42 needs to go back to baking cookies and stop trying to think about finance.

The simple loan poster is just not even worth adressing, hopefully everyone here who is responsible for a mortgage payment understands, at the very least, that it is not a simple loan. This was a comcept introduced in high school.

[Anonymous]

Anonymous wrote:So do we have some sort of consensus here? Pay your credit card on the 1st of the month, but pay your fixed-rate mortgage any time between the 1st and the 15th?

YES.