In January I made a principal curtailment against my mortgage in the amount of $10,000. On the face of the check, at the top, I wrote, "TO BE APPLIED TO PRINCIPAL ONLY". GMAC Mortgage applied the payment to multiple monthly payments of principal and interest, and indicated that my next automatic payment would not be collected until the following June. At the time of the curtailment, my principal balance was $198,000, and the curtailment should have reduced it to $188,000. At a balance of $198,000, the typical distribution of the fixed monthly payment of $2070 would apply $1261.01 to principal and $809.54 to interest. The distribution of the same payment toward a balance of $188,000 would apply $1311.90 to principal and $758.65 to interest. Furthermore, if no further payments are collected until 6 months later, the whole point of shortening the life of the loan is subverted.
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