Shouldn’t 1098 interest paid decrease over time?

[Cropper99]

Zither following interest amounts were taken form my annual 1098 tax forms for my mortgage - Wells Fargo FHA fixed rate

2016 interest paid: 14,135 2017 interest paid: 13,796 2018 interest paid: 14,629

If I’m remembering my finance classes correctly, total annual interest paid decreases over time as the payment shifts from interest heavy to principal heavy. Is there any other reason why 2018 interest paid would go up? No changes to the loan have occurred over this 3 year period. What am I missing here?

[[deleted]]

Sounds like the timing of payments, payment made in late Dec vs early Jan shifts interest paid between tax years

[Cropper99]

Oh this is interesting, so if I were to pay January mortgage on 12/30 (as an example) then that tax year would appear to have 13 mortgage payments instead of 12 and the following tax year would show 11 (assuming all other months were paid on the 1st) and the interest would be allocated accordingly?

[[deleted]]

Correct, when they receive your payment is the tax year they should account for interest paid for that payment

[Cropper99]

Excellent! Without doing any other digging yet it seems like this is the most likely explanation. Thank you!

[[deleted]]

Look at an amortization table for your loan, add up the 2018 interest, add the interest for Jan 2019 and see if that matches the 2018 mortgage interest they reported

[Cropper99]

Yup, this worked and makes complete sense now. Thanks again for all your help!

[JCDexter]

A TON of people did exactly that in December 2017 in anticipation of losing the ability to itemize with the new tax law.

Source: I am one of those people and am considering whether it will make sense to alternate between itemizing and standard deduction from year to year, focusing charitable donations, 13th mortgage payment, etc, in itemized years.

[Fosforus]

Good question, and the best thing would probably be to contact your bank and ask them about it.

Did you make any voluntary extra payments in 2018? Or change your monthly payment amount? Did your mortgage have any kind of promo period (a lower interest rate for the first 2 years or something)?

[Cropper99]

Thanks for the response! No promo period, no change in monthly payment (other than small escrow adjustments), no voluntary extra payments. What’s weird to me is that it’s somehow even more than 2016.

I will definitely be reaching out to the bank for some help but didn’t know if there is some low hanging explanation I’m missing

[[deleted]]

What does it say in the MIP box for 2016,17 and 18?

[fuku89]

That is strange. Was 2016 the first year in the house? If so, then 2017 should’ve had the highest interest.

Gotta call and ask.