payment received on the due date, (usually the first) . If paid after grace period, then
pricipal and interest are the same and you also pay a late charge in amount as set forth in note,
usually 4 or 5 % of amount of payment.
Here is language from an actual standard note:
"Each monthly payment will be applied as of its scheduled due date
and will be applied to interest before Principal. "
The perative language is "scheduled due date"
Some loans are set up for weekly, bi-weekley , semi-monthly. in the note, or with a seperate document , which usually provides for auto pay. Believe that BOA charges $4 per payment or some such for this priviledge, but your loan is paid off sooner , with less cost. This is because
principal reduced during the month as payment is received, so you are paying interest on a lesser balance. Same effect if make additonal principal payments one or more times per year.
In most cases, paying the regular payment early or late will not effect the amortization of your loan. You will end up paying the same amount over the life of the loan.
We are NOT to interpret loan documents, but you can save yourself a whole lot of time waiting for someone to pick up a phone, if you can answer a borrower's question just by pointing to a language in the documents. Spend some time reading the trypical dox that your borrowers will be signing , and make yourself a better educated and more professional NSA. |
