I just refinanced and got a 30yr loan @ 4.25% with US Bank.
While the customer service I recd so far has been far below the mark, the representative I spoke to said I do not need to pay my mortgage on the 1st of the month. She said its perfectly ok to pay anytime within the grace period (upto 16th of the month), and there will be no fees / delayed interest accruing on the same.
Earlier I used to have a ACH payment deducted from my checking on the 1st of every month, but this has got me thinking.
Has anyone tried paying late (but within the grace period) before? What were the consequences?
I think this is pretty standard. I know when I had my mortgage with Citi, the grace period was through the 15th, and I could even schedule my automatic payment in their system for any day between the 1st and 15th.
posted: Nov. 16, 2010 @ 1:33p
Yeah, they have things like due on the first, late after the 15th. At least mine does; I trigger the push payment to occur on the 5th or something.
posted: Nov. 16, 2010 @ 2:01p
I have paid my mortgage on the 15th for many years, and across multiple lenders. It's always been with a program where the servicer takes the money directly from my bank account on the requested date. I have never noticed any "consequences." My credit report shows on-time payments, I've never gotten a complaint from the bank, etc. As with jdmetz, every bank I've borrowed from allowed automatic payments to be set up during the grace period.
The exception is for people with simple mortgages. (I'm sure you didn't get a simple mortgage if you went through US Bank - they're usually only available through sleazy places and brokers.) For those, the interest accrues daily, so paying late means that you actually have more interest accruing on your mortgage. It would still be worth it if you have a savings account paying more than your mortgage rate, but it's not the free ride you get with a traditional mortgage.
Senior Member - 10K
posted: Nov. 16, 2010 @ 2:46p
Most do have a grace, but I would not try to be cute and time exactly 15 days. Maybe 9 or 10.
posted: Nov. 16, 2010 @ 2:53p
There was an extensive thread on this years ago about the accounting methods used for mortgages
On most traditional mortgages you can Pay after the due date, right up to the late date with no charges or fees. The advantage is you keep your money in the bank longer and earn a small amount more interest
As pessimist notes the are some simple interest loans, usually these are heloc or hel where every day you pay before the late dare reduced your interest expense
So yes us bank is correct you can wait till the late date without penalty
posted: Nov. 16, 2010 @ 3:07p
SIS, that's a good point: essentially all HELOCs are simple interest, as are some HELs. My comments referred to purchase/refi mortgages, where you're not going to find many reputable lenders pushing simple interest products.
(The nomenclature is also ridiculous. With the exception of negative amortization loans, no mortgages use compound interest, so under normal finance terminology they're all simple interest. But the mortgage industry instead uses "simple interest" to mean "daily accrual." There's no industry term I know of that means "monthly accrual," since that's the way that the vast majority of mortgages work.)
Alcibiades, I've never had a problem using the bank's own automatic payment system to pay on the 15th. Even if you schedule your payment each month, I would think you'd still be fine. If you send payments via bill pay, though, more caution would be prudent.
Senior Member - 4K
posted: Nov. 16, 2010 @ 3:38p
I didn't think anybody actually paid their mortgage by the 1st You won't have any problems if you pay by the 15th, but a couple of days of buffer is prudent.
Speaking of this, I had mortgage servicer that earlier this year started calling us around the 8th-10th of the month to leave a message reminding us of the payment and asking us to call them to talk about it. I actually never called them and stuck with my billpay scheduled on the 10th until I refinanced a few months ago and got a new servicer. They never reported anything on this- I think it was just a bureaucracy trying to implement procedures to catch people early that are having problems paying their mortgage.
posted: Nov. 16, 2010 @ 7:33p
I've always paid our mortgages on or about the 15th of every month. No negative repercussions of any kind.
And I rather like the small amount of additional interest I receive holding the money until the tail end of the grace period.
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