Does it benefit me to make my mortgage payment 25 days early each month?

Q: Does it benefit me to make my mortgage payment 25 days early each month?

A: Unless the mortgage lender is actually posting the payment when you send it, the answer is no. Your payment is required to be in the lender's hands by a given due date, and any payment you send before that date will be applied by/on that due date. Think of it this way: A payment is due by the 6th of the month. Your payment is applied; five days later, the next payment you send arrives. It's not due until the 6th of the next month, and the lender will process this as though it came in right on schedule.

Standard loan amortization means your loan is set up on a monthly compounded arrangement, with a payment due in each of 360 monthly periods (30 year term). As long as a payment arrives during each 30-day window, it will be processed as that month's due payment. If mortgages were compounded using a different method--daily compounding, simple interest, etc.--it might have some effect, but that's not the case here.

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Keith Gumbinger
Keith Gumbinger
Mortgage Expert
Vice President, HSH.com
About Keith: Mortgage market observer and analyst with 35 years experience... (more)
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