mortgage

# Bank's mortgage numbers look funny

Dear Dr. Don,
Why is it when I print out an amortization schedule, it shows that my loan balance is a different amount than the loan balance reflected on the transaction history of the actual payments I made to the lender?

My loan originated in June 2004. It was a \$200,000, 15-year fixed-rate mortgage at 5.25 percent. The monthly payment is \$1,607.76.

The amortization schedule shows our loan balance would be \$151,740.91, based upon that payment amount. However, we sent an additional \$92.24 (to principal) for 23 months from June 2004 to April 2006 totaling \$2,121.52. The bank says our current loan balance (including March 2009 payment) is \$150,204.80. Shouldn't the current loan balance be \$149,619.39, to reflect the additional payments we made?
-- Donna Debates

Dear Donna,
One potential reason for a discrepancy is in the timing of the mortgage payments. If your loan originated in June 2004, the first payment wouldn't be until at least July. So, you would not have made an additional principal payment in June 2004.

If the first payment was in fact due in June, and that's when you made your first of 23 additional principal payments of \$92.24, then I estimate your loan balance as \$149,146.21 after the March 2009 payment. That's a difference of \$473.18 compared to your estimate of \$149,619.39.

The difference between my number and yours is that you don't consider how the additional principal payments reduce the interest expense on the outstanding loan balance. That means more of your monthly payment goes toward the repayment of principal. You simply subtracted the total payments from the original amortization schedule (\$151,740.91-\$2,121.52) = \$149,619.39.

Bankrate's Mortgage payment calculator does allow you to input different prepayment strategies but won't allow you to add an additional principal payment for a limited number of months. I created a custom amortization schedule on an Excel spreadsheet to incorporate your payment history before finding out that the Mortgage Professor's "Extra Monthly Payments" calculator will let you input your 23 payments and provide you with a loan amortization schedule.

There's almost a big difference between my number (which matches the number from The Mortgage Professor's calculator) and your lender's number. It is certainly worth pursuing this with your lender.

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