photo credit: Andrew Rollinger
As I was going over the budget this weekend, I realized that our mortgage would be auto-deducted the day BEFORE our 1st paycheck next month. That seemed completely inconvenient for several reasons. The first is we have trouble keeping money in the checking account, if it’s there inevitably we save it or spend it, if it is gone we live without whatever we thought we “needed.” The second is that I will be leaving the same day for our trip to San Francisco, and I would like to have some cash on hand for the inevitable travel expenses.
I considered calling the mortgage company to ask them to take us off the auto-deduction plan, and while I was thinking about it I looked up the mortgage account online. (this was 9pm at night, so the call center wasn’t opened) I realized that despite being due on the 1st of the month, our account was being debited on the 10th each month. I knew this, but I didn’t think about what kind of financial impact it was having. We were paying more in interest because we were paying on the 10th and not the 1st. The mortgage company was doing us a “favor” I guess by making us pay more interest. Thanks, but no thanks.
I called this morning and talked to a friendly CSR, and sent off an email a few minutes ago with the vital info, and a statement that read like this:
The auto-deduction should be canceled as of tomorrow, May 13th, 2009.
(personal info)
signed,
me
If they need more info or the hubby’s “signature” by email we’ll get that done today.
I think the mortgage company is a good company, and clearly it takes longer to process the payment if you use an outside bank, but since it is linked on our checking account I can save us on the 10 days of interest by paying it on time, or early and avoiding the trap of thinking that holding on to my money for 10 extra days is worth the expense.
We are paid bi-weekly it is easier for me to make a payment when we are paid, and not wait until a specific date. Once we get close to being a month ahead we call that an extra paycheck, and start the cycle over again. If we had no other debts we were working on paying off I would just keep paying ahead of schedule, that way we’d cut down our mortgage down much quicker.
While I don’t blame the company for trying to make a few extra dollars in interest, and the CSR and my past dealings with the company have been great, I still included this in my Squeaky Wheel series, because without asking or checking into the implications we would have paid a ton more interest over the life of the loan.
It pays to check your monthly statements and understand them clearly.
Kelly
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