A clarified question on a mortgage renewal
A fixed intrest rate #1 = ??? A by weekly payment #2 = ???. a maturing date #3 =jan5th. Amortization 24.5 years. Does the fixed rate apply up to but not exceeding Jan 5th. That's the question. Ok no replies yet. The legality's are as posted. Out of curiosity what part of this question am I missing? This is really what I can't understand. If you put your own numbers in what are your THOUGHTS? I know we are all learning as we go. The fact that there are not as of yet one reply shows exactly how much we know. As well as how a person can be taken for more then they owe.
Last edited by Bender; 2017-01-08 at 04:20 PM.
Ok I had my appointment today. With a whole lot of confusion we finally come to the conclusion that it was in fact an error although I did not get my money back it was applied to my principal. The conversation went as follows: me: why am I paying intrest from the 22of December to the 6th of January at 7% when my mortgage came up for renewal on the 5th?
Loans manager: because you pay it ahead don't you?
Me: ??? No I don't think that's how it works.
Loans manager: you get the loan then you make your payment including the acquired intrest.
Me: yes?? Acquired as in built up intrest?
Loans manager: yes acquired intrest.
Me: again as in built up?
Loans manager: yes.
Me: so how did I acquir 200 dollars intrest as of the 5th.
Loans manager: I need to make a call....
Loans manager: you still made the same payment you always have its just we paid the principle and the intrest along with your insurance and what not.
Me ????? I don't understand.
Loans manager: we took your regular payment pluse the intrest from the 5th and the 6th.
Me: so that payment in front of you is a regular payment +200$ intrest for two days?
Me again: that payment that equals the exact amount of the mortgage payment to the cent @7%.
Loans manager: another call...
Loans manager: ok the computer was set to take out your mortgage it automatically changed your rate and applied it to your payment. That extra money has been applied to your principle.
Either a very smart man or the other I personally think he didn't get where he is by being stupid.
Either way problem solved.
I think it may be easier to understand if you think of it this way.
Mortgage payments are done in arrears( rent is paid in advance).
You are on bi weekly payments so your maturity date does not fall on a payment date.
When the bank takes your payment, they calculate the interest from your last payment date up to the date of payment. This amount is taken from your payment and the remainder is applied to the principal.
In your case your mortgage renewed between payment dates.
So say your last payment was 500 on Dec 22 with interest paid to that day.
Your mortgage renews on Jan 5th and the rate jumps from 3% to 7% and based on that new rate your payments are calculated and are increased to to 700.00. ( in order to pay off mortgage at new rate over the remaining amortization)
Your next payment is scheduled for Jan 6th. Because you have renewed your mortgage the payment on the 6 th will be 700.00.
Here is how that payment will break down.
The bank will calcalate interest at 3% for 13 days ( from last payment date to renewal date) plus 1 days interest at 7% ( from renewal date to payment date).
These two figures will be totalled and charged to interest and the balance of your payment will go to principal as it always does. In this case because most of your interest for that payment period was at a lower rate, more would go to principal.
Note, I am not sure what your interest rates and payments were so this is just an example. The payment date and maturity date could work against you next time.
That is exactly the answer I was looking for and as they said that is what they did. I...just like them..expect things the way they should be. Having them take out extra money and apply it to my mortgage without it being stated as such is still wrong none the less it's done and I'm left trying to figure out how to get back and forth to work now.
Originally Posted by twa2w