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Before you make that extra mortgage payment

If you can afford to make an extra mortgage payment, make sure you get the proper credit for it from your lender, advises Chandra Ortiz, a Baldwin attorney specializing in real estate and co-chair of Nassau County Bar Association’s Real Estate Committee.

“If you are making extra payments, be sure it’s accomplishing what you want it to," she says.

First, take a close look at the bottom tear-off portion of your bill. Note the categories of: Total Amount Enclosed, Additional Principal, and Additional Escrow. “If you’re trying to decrease your principal, make sure that you clearly designate that you want your extra payment to be applied to 'Additional Principal,'” says Ortiz. “If you don’t let the lender know that this is where you want the additional funds applied, then the bank will hold your money off to the side in another account, and mark your status as only being ahead of schedule.”

Ortiz says that would be a shame if your intention was to hammer away at your principal and ultimately lower your interest. “If, however, your goal is to make an extra payment to take financial pressure off the next month,” continues Ortiz, “then send in the extra payment as usual, under 'Total Amount Enclosed.'”

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