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You may see a SLIGHT interest savings depending on how and when your mortgage servicer remits your payments. However, make sure your understand you are ineffect “investing” that early payment at your current mortgage rate; i.e. when you make an early payment on a 4.25% mortgage you have invested that money to reduce a 4.25% interest charge. Do you have/know of any alternative investments that would yield you better than 4.25%? I know for 3.5 weeks it doesn’t appear to be much, but remember, all rates are quoted annualized. What I am saying is hold on to your money as long as possible, unless you inquire and learn you will see a substanial savings by making early payments.
I am guessing you will run into an issue with your mortgage servicer. Unless your loan is a portfolio loan product (i.e. not guaranteed by one of the GSE’s or HUD, etc…) your loan servicer will more than likely hold your partial payment in suspense until they recieve your full monthly payment. I would also guess that if you actually tried to pay daily or even weekly they would end up just rejecting your payment and sending it back to you. So, it is MUCH better to take 1/12th a monthly payment and add that on to each payment, or do as Ira stated and keep the extra payment you would make each year by paying weekly(1/12th a pmt/mo) and put it into an account or bond fund that would give you and interest rate comparable to your mortgage rate. You must account for your tax savings in your current rate which would essentially make your effective mortgage rate lower than what the note rate is depending on what your current tax bracket is.
I am retired and living on a pension. I must save save from this months pension check to pay next months mortgage payment or it would consistantly be paid several days late. Rather than wait till the end of the month to send it in I py it at the beginning of the month resulting in making my payment three and a half weeks early each month. Should I see a savings in interest charged on my monthly statement?
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