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Wednesday, August 3, 2016

Did You Know? Grace Period on Your Monthly Mortgage Payment Isn’t Free

Most homeowners with mortgages know that their mortgage payment isn’t “late” until, say, the 15th of each month, but what they may not realize is that they will owe interest for the days between the first of the month and when the lender receives the payment

It’s easy to think those days are free because your mortgage payment is the same whether you pay on the first of the month or the 15th of the month.  However, the lender’s computer keeps track of your payment dates, and you will find — if you keep the same mortgage until it’s paid off — that your final payment is bigger because of all that extra unpaid interest.

Let’s say that the principal component of this month’s payment is $800 and you pay on the 10th of the month. You owe 10 days’ interest on that $800 which will accumulate over time as you keep paying on the 10th of the month.  At payoff time, you will have to pay that accumulated interest expense.

Published Aug. 4, 2016, in the YourHub section of the Denver Post and in four Jefferson County weekly newspapers.

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