Should I make 3 mortgage payments all at once?

[Minnie_me]

I'm a teacher, and for the first time in my career/life, two things are happening:

~ I'm a single parent and homeowner (I owned a home before, but not on my own)

~ I'm getting a "lump sum" of my salary on the last day of school next week. My next payday after that will not be until September 16th.

The September paydate REALLY sucks because my mortgage is due on the 1st, with the late payment due by the 15th. So I'll have to make 3 mortgage payments out of this "lump sum" I'm getting.

My question is this: should I just bite the bullet and make all 3 payments when I get the money? Is there any reason I *shouldn't* do this? Any advice would be greatly appreciated!!

 

[skatingmom]

I'm a teacher too, and our district does the lump sum payment as well. I always make my house payments right after I get my final paycheck. That way I get my biggest payments out of the way and can budget for the rest of the summer. Eveybody's situation is a bit different as to what expenses they need to plan for, but that is what works for me.

 

[descovy]

I can think of one HUGE reason not to do this... My bank would just apply the extra $$ toward the principal, but next month you would still owe the usual amount!!!

You can check with your bank to see if you could pay a 3x payment and not have to pay for 3mos... But I ask you, what will you do if the "rep" misunderstands what you are asking or gives incorrect info? It happens! Can you still pay the "regular" amount next month?

If you have credit card debt, or car payment I would use the money on that. Car payments usually do stretch out your due date if you pay extra. Or else just sit on the money as extra cushion as you pay regular bills the next few months.

Just be careful if you choose to try to pay a 3x mortgage payment!

 

[Minnie_me]

I can think of one HUGE reason not to do this... My bank would just apply the extra $$ toward the principal, but next month you would still owe the usual amount!!!

THanks for the heads-up ---but I think I'm okay in this area. When I pay my mortgage online, there are certain boxes to check to indicate where the money is going (toward the principal, the interest, etc.). I'm pretty sure I can do it safely.

 

[minushka72]

You could just put it in the bank and earmark it for the next pymts. Then you get the interest to your savings account (I know, not much but still better than nothing.).

 

[jerseygirl81]

When DH was teaching I used to put the lump sum into the savings acct and I would divide it by 4 since he got paid twice a month 2 payments for august 2 payments for July. I would transfer over one payment amount on the 15tj and one on the 30th and pay my bills as I usually did. I wish you well with the new house and single parenthood. Linda

 

[skatingmom]

THanks for the heads-up ---but I think I'm okay in this area. When I pay my mortgage online, there are certain boxes to check to indicate where the money is going (toward the principal, the interest, etc.). I'm pretty sure I can do it safely.

I do mine online as well, and what I do is to make them a couple of days apart. That way each one posts before I do the next one, and the site actually is set for the next month's payment. I have never had trouble with the payments not being made as regular payments, but I can understand how that could happen in some instances.

The other reason I like to make them right away is to save on interest on my home loan...in my case, that's a much better investment than the tiny amount of interest I would get on the money in my savings account!

Good luck whichever way you choose to go!

 

[dd50]

I do mine online as well, and what I do is to make them a couple of days apart. That way each one posts before I do the next one, and the site actually is set for the next month's payment. I have never had trouble with the payments not being made as regular payments, but I can understand how that could happen in some instances.

The other reason I like to make them right away is to save on interest on my home loan...in my case, that's a much better investment than the tiny amount of interest I would get on the money in my savings account!

Good luck whichever way you choose to go!

That is what I would do. Just make sure it is showing the month that you want to pay.

I use to do that with my car payment when I was a single mom because I was always afraid that something would come up and I wouldn't be able to do it. I was always 3 months ahead.

 

[disney1990]

Put the money in your checking account. Write out 3 checks (one for each month) and put them in an envelope with the month written in the corner at the bottom. Go ahead and deduct the amounts out of your checking account so you won't spend the money. They you can mail one envelope each month.

 

[disneymarie]

Earlier this year I had a similar situation. I talked to a human and they structured and applied the lump payment so I had none until the date I stated. When i signed in online I could see the structure, and knew I was okay not to have to sweat it out the next three months if they goofed up.

Good luck in you life, and smile about the little things, laugh when you feel like crying. THere are good days, better days, bad days and some worse. But every day you wake up is a new day.
di

 

[bumbershoot]

We earn interest on our checking and savings accounts, so I would keep the money until it's needed. Put it aside, mark it off in your register, do what you have to do to know what you really have for the rest of the budget, and don't dip into it. But keep earning the interest on it. (now if you were trying to pay off principal then the thoughts would be different...but you're not, so that's how I feel)

 

[pixiewings71]

If we did that our mortgage company would apply the extra payments to interest and principal but I'd still owe the following month.....be very careful with this! Speak with a person, get written documentation just in case...

 

[SandrA9810]

If she's following her bank account online, and not through a register book, it can be very difficult to remember that a set amount of money is earmarked for something. I'm a totally online banking kind of person. I try to do all paying as debit, and if there is a credit card charge, the bank puts a hold on that money and it's not available till it clears. Checks just freak me out so much, because they can take forever to come out of the account. After the first few times paying rent, ohh so many years ago, a few times by checks, it got changed to being paid by money orders quickly.
Publix allows you to purchase a money order with a debit card. The money's automatically taken out of the account, and I didn't have to worry about ATM withdrawal limits to get the money orders with cash. The limit is $500 per check, and only 80 cents a check. That was the best investment made, and guaranteed that the rent was paid on time each month.

Now my aunt, the account, does it all the old school ways. Pen and paper, and using the registers in the check book. She follows everything to a T through that. So if she writes a check and it doesn't get cashed for 3 months, it doesn't affect her in any way. She doesn't follow her banking online on a day to day basis, and only cross checks the statements to her register to make sure the bank is correct.

If you can trust the bank to set it up properly then pay it off in a lump sum. If you're excellent at following a register and can earmark it off early, then leave it at that. If you want to make the payments as usual, but don't trust yourself, get some money orders now to cover you for later.

 

[Swimalie]

Put the money in your checking account. Write out 3 checks (one for each month) and put them in an envelope with the month written in the corner at the bottom. Go ahead and deduct the amounts out of your checking account so you won't spend the money. They you can mail one envelope each month.

This is what I would do, too.

 

[mickeymaker2003]

I would write three separate checks (or pay in three separate payments online) and make sure that they are earmarked correctly.

Paying them right away makes lots of sense. You will save more in interest on your loan than you would earn in your savings account and the money has to be paid regardless.

 

[tar heel]

Ours would also make this one payment with extra principal.

I wouldn't do this.

 

[Mom_Rides]

The only way that your payment would apply the "extra" funds to the principle is if you did one lump sum payment. The account would not see that it was three payments, just as one with the extra going to the principle. The best way to ensure that your payments will be applied as such is to do three separate payments. I noticed that you said you make you payments online. So you would need to do a payment for July, then make another one for August, then make another for September. Three transactions. If you really want to be sure it worked, you could do as another post suggested and wait a few days in between to be sure they are being applied to the correct month.

 

[Ali]

I'm a teacher too, and my DH tries to do this every year. My credit union will only let him pay up to 60 days in advance. He pays the first 2 payments and then waits another month and does the last one. I am always out of money by August 1 so this year I put some money into a seperate account to in august I can go get it if I need it.

Make sure you are not applying to principal, my coteacher had that happen to her last year and it really meesed her up.

 

[bdcp]

I would put it in a savings account and transfer enough each month to make that month's payment.

The "something might come up" argument doesn't make sense, because if something comes up and you've spent the money on your mortgage ahead of time, what will you do then? Either way you'd have to pay for that something that came up.

 

[MissouriPrincess]

I'm a teacher and I do this very thing every summer. I must be "old school" because my bank still uses coupons for each month. I just tear out the appropriate coupon for each month and mail them in with a check. I put each payment in its own envelope. I don't pay anything again until I'm ready to pay October's payment. (June is paid out of May's check.)