Rounding in Mortgage Assistant

[Mike or Penny Novack]

David Carlson wrote:

>My lender has a strange way of doing things.  If I pay more than the exact 
>monthly amount, they need to make a manual adjustment in their system.  Thus 
>they do not like rounding up or adding a small amount.  They are much nicer than 
>the big banks, so I don't rock the boat.
>
>David
>  
>
Actually commenting on the previous response (about adding a little bit)

David, ask your bank if instead of "rounding up" or adding an arbitrary 
amount they would be comfortable with your adding the principle portion 
of the next payment (according to the amortization table they provided). 
That does not require any recalculation of the amortization table on 
their part, just brings forward the series of payments by one payment so 
the end of the mortgage is one payment closer.  But like I said, ask 
them first.

Michael D Novack, FLMI

PS -- Explaining the math of that. In effect you have made two payments 
except for the second there is no interest due. THAT particular interest 
payment which was the amount due on the loan balance after the first 
payment for the next month never gets paid (what you save by doing this).