Submitted by lookingupnow1 t3_yttqpc in personalfinance
A couple months my mortgage got moved to a new company. With the stock market in such bad shape I decided to pay down on my mortgage a few months in advance. With the thought that I am preventing some of the interest from incurring and if I needed the money for something I could just stop paying early till the bill caught up.
The new mortgage company sent a letter however telling me that if I want to have the early money prevent interest I need to call them and say that it is going to the principal, separate from my monthly payment. If I do not call them they will treat it as just money they are holding on to for me until it's due.
I am still pretty new to the mortgage thing, but this seems off to me.
Update: Thank you all for the information I have received. I now know that mortgages do not work like credit card payments, and that if I wanted to kill my interest i would have to apply it to the principal which would not count as a early monthly payment.
Going forward I will instead look for some low risk investments to put my little extra savings into.