Personal Finance and Investing

yodermon

(6,143 posts) Thu Jun 7, 2012, 04:19 PM Jun 2012

Overpaying mortgage

Well since my LTV is too high to refi (not underwater though -- yet), I'm thinking of overpaying my mortgage to maybe pay it off early. I want to make sure there's no overpayment penalty, and that the overage actually goes towards the Principal, so I sent an email and got this reply:

After reviewing your loan information, I have found that there is not a
prepayment penalty on your loan.

When a payment is received without instructions for application, the
payment will be applied in the following order:

Principal and Interest
Escrow
Late Charges and Other Fees
Non Sufficient Funds (NSF) Fees
Corporate Advance
Additional Principal Curtailments

Ok so my naive question is well, is it Principal or Interest that will be hit first with an overpayment? Or will an overpayment somehow be split between the 2 in proportion somehow? And what's with the "additional principal curtailments" at the very bottom, isn't that really what I'm aiming for ? It almost sounds as if they'll fill up my Escrow account before applying towards principal. Or if I attach an "instruction for application" to the payment saying "apply it to P" then that'll suffice...?

Obviously I should talk to them directly but I thought I'd throw it to the great DU collective before sitting on hold forever and arguing with a rep.
This is a Wells Fargo (gag) mortgage, BTW

thanks all!

3 replies

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Overpaying mortgage (Original Post) yodermon Jun 2012 OP

My understanding has been that if you explicitly tell them to apply to Common Sense Party Jun 2012 #1

thanks for the advice Csp yodermon Jun 2012 #2

I overpay mine online and it's fairly simple -- I add the extra $$ to the "extra principal" column K8-EEE Jul 2012 #3

Common Sense Party

(14,139 posts)

1. My understanding has been that if you explicitly tell them to apply to

Reply to yodermon (Original post)

Fri Jun 8, 2012, 03:17 AM

Jun 2012

the principal only, they will do so. But you almost have to hit them with a brick to make sure they understand that's what you want. Since each institution is different, I would definitely call and speak to someone who knows what they are talking about and write down their full name and extension, then ask exactly what you should do if you want your overpayment to be applied ONLY to the principal.

yodermon

(6,143 posts)

2. thanks for the advice Csp

Reply to Common Sense Party (Reply #1)

Fri Jun 8, 2012, 06:23 PM

Jun 2012

K8-EEE

(15,667 posts)

3. I overpay mine online and it's fairly simple -- I add the extra $$ to the "extra principal" column

Reply to yodermon (Original post)

Tue Jul 3, 2012, 05:25 PM

Jul 2012

When paying and they immediately give me the new principal amount of the loan. However I never thought to ask if there was a penalty for pre-pay so thank you for your question, I really learn a lot from this forum!

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