Mortgage calc. for early payment and skipped payments

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snowman9000
Posts: 1015
Joined: Tue Feb 26, 2008 9:16 am

Mortgage calc. for early payment and skipped payments

Post by snowman9000 »

I hold a mortgage. In 2021 the mortgagee wanted to pay 6 months at once. So he paid a 6 month lump sum which consisted of the normal payment due on that date, plus the amounts of the next 5 months. Then he did not make another payment during that 6 month period.

I want to calculate the numbers for the year and the balance going forward. I've seen online calculators that handle an extra payment, but not one that handles skipped payments. He might not expect to have the numbers corrected for his early payment, but I want to be able to do it right.

Suggestions for calculating the right numbers? Thanks!

For extra credit, here are the numbers:
240 month loan
5% interest
First payment August 1, 2019
So, monthly payment has been $1517.90

On August 1, 2021, he paid the normal $1517.90, plus another $7589.50, five months' worth, paying him up through the end of this month.

I want to find out the interest and principal for 2021, plus the balance going forward prior to the upcoming Feb 1 payment. There should be a new payment amount going forward, obviously. I can come up with that once I know the balance for that date.
nolesrule
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Joined: Thu Feb 26, 2015 9:59 am

Re: Mortgage calc. for early payment and skipped payments

Post by nolesrule »

What are the actual terms of the mortgage contract? There is what you want to do and what is allowed under the mortgage contract.

The following is based on a typical bank-owned mortgage....

Usually when someone pre-pays future payments to a mortgage and not additional to principal it has no effect on the interest as the payment will get applied to the mortgage on the scheduled due date for each of those payments.

The payment amount would not change either.

Only additional payment to principal would lower the interest, and that would not change future payment amounts nor allow for skipped payments but instead would change the remaining principal and interest splits, resulting in a lower last payment or fewer payments.

making the January payment early does allow the interest forthe January 2022 payment to be included on the 2021 Form 1098
Last edited by nolesrule on Mon Jan 17, 2022 2:17 pm, edited 1 time in total.
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happenstance
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Joined: Sun Jul 26, 2015 11:24 am
Location: NYC

Re: Mortgage calc. for early payment and skipped payments

Post by happenstance »

I think your best bet would be to use a spreadsheet to create a full mortgage amortization table. Excel has a template called "Mortgage Loan Calculator" that does this, for example. Then you can go and manually tweak the specific payments (sextupling the one principal payment and zeroing out the subsequent five payments).

But I agree with the above poster that interest payments were likely still due in those five subsequent months. Typically additional principal payments just lower the interest calculation for the future payments.
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familythriftmd
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Location: Wisconsin

Re: Mortgage calc. for early payment and skipped payments

Post by familythriftmd »

I've just been using an Excel. You can find "mortgage amortization" templates pretty easily, then just change the actual payment column per month based on how much you invested extra into the equity.
Hyperchicken
Posts: 2006
Joined: Mon Mar 02, 2020 4:33 pm

Re: Mortgage calc. for early payment and skipped payments

Post by Hyperchicken »

Amortization schedule can be trivially built in Excel or any other spreadsheet program of your choice.

You only need four basic arithmetic operations to do that. There is nothing fancy about it.

You can then run whatever what-if scenarios you have in mind.
Topic Author
snowman9000
Posts: 1015
Joined: Tue Feb 26, 2008 9:16 am

Re: Mortgage calc. for early payment and skipped payments

Post by snowman9000 »

nolesrule wrote: Mon Jan 17, 2022 11:54 am What are the actual terms of the mortgage contract? There is what you want to do and what is allowed under the mortgage contract.

The following is based on a typical bank-owned mortgage....

Usually when someone pre-pays future payments to a mortgage and not additional to principal it has no effect on the interest as the payment will get applied to the mortgage on the scheduled due date for each of those payments.

The payment amount would not change either.

Only additional payment to principal would lower the interest, and that would not change future payment amounts nor allow for skipped payments but instead would change the remaining principal and interest splits, resulting in a lower last payment or fewer payments.

making the January payment early does allow the interest forthe January 2022 payment to be included on the 2021 Form 1098
Thank you, you're right and it sure makes things simpler for me. :happy
alex_686
Posts: 13320
Joined: Mon Feb 09, 2015 1:39 pm

Re: Mortgage calc. for early payment and skipped payments

Post by alex_686 »

snowman9000 wrote: Mon Jan 17, 2022 11:28 am I hold a mortgage. In 2021 the mortgagee wanted to pay 6 months at once. So he paid a 6 month lump sum which consisted of the normal payment due on that date, plus the amounts of the next 5 months. Then he did not make another payment during that 6 month period.
This is a pretty trivial question.

In month 1 you make 6 months of payments.

In month 3 the bank lets you know that in are in violation of your loan convents and that they are going to start the foreclosure process per state law.

In month 6 they size the home.

Loans don't work like you are suggesting. You don't get to skip months if you "pre-pay" becuase you can't pre-pay. You are making your normal required monthly payment plus a additional principle payment. This does not affect your legal liability to make next month's payment.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
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nps
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Re: Mortgage calc. for early payment and skipped payments

Post by nps »

alex_686 wrote: Mon Jan 24, 2022 9:42 am
snowman9000 wrote: Mon Jan 17, 2022 11:28 am I hold a mortgage. In 2021 the mortgagee wanted to pay 6 months at once. So he paid a 6 month lump sum which consisted of the normal payment due on that date, plus the amounts of the next 5 months. Then he did not make another payment during that 6 month period.
This is a pretty trivial question.

In month 1 you make 6 months of payments.

In month 3 the bank lets you know that in are in violation of your loan convents and that they are going to start the foreclosure process per state law.

In month 6 they size the home.

Loans don't work like you are suggesting. You don't get to skip months if you "pre-pay" becuase you can't pre-pay. You are making your normal required monthly payment plus a additional principle payment. This does not affect your legal liability to make next month's payment.
It really depends on the lender. Some of them will apply overpayments as advance monthly payments, especially if they are not clearly designated as principal payments. Best to check with them directly.
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