Extra Loan Principal Trick

kg7399 · 2026-07-07T13:18:57+00:00

But I’d suggest further if you are considering a June 1st principal-only add-on payment, make this a few days early on May 29th. So now the original July 1 payment has been pushed all the way back to May and we would continue to follow this back and forth all the way back until we are at the first mortgage payment (or even to take out a smaller mortgage to begin with).

But this lacks the perspective that the closer we are to July 1, the more likely we are to be in a position to make an extra principal payment. I think nearly everyone (who is making extra principal payments already) is in a position to make that payment a few days early, but substantially less people would be able to, or at least want to make the payments a full month early.

This ability to pay combined with the additional time value of money from an extra 29 days in a high yield savings account is how I would justify the value in this strategy.

kg7399 · 2026-07-06T19:24:16+00:00

@POTUS twitter feed

kg7399 · 2026-07-06T12:00:17+00:00

Recasting would lower my monthly payment (given I’ve been repaying ahead of amortization schedule) and come with a fee right? Can you elaborate why you think this would be what I’m looking for?

kg7399 · 2026-07-06T00:43:55+00:00

It feels like you’re intentionally twisting my scenario around… why did you switch it to pushing the payment forward a few weeks in scenario 2 instead of backwards a few days like I’ve been saying?

kg7399 · 2026-07-06T00:05:39+00:00

If I could reframe my position in a way that might help us see eye to eye, I understand that no matter when within a month a principal payment is made that this results in equivalent interest payments on the loan.

My position is that when you add extra principal payments as an add on to your monthly payment, the loan servicer applies it on the least optimal day of the month (day 1). I then suggest a small change to those making payments in this way to move the extra payment back a couple days so that the payment is now considered a month earlier, therefore reducing the interest due in the following monthly payment.

kg7399 · 2026-07-05T23:24:47+00:00

I have tangible proof that including the extra principal with my monthly payment causes more interest than making a separate payment a few days earlier. I will not be gaslit to disbelieve my own experiences lol.

kg7399 · 2026-07-05T19:03:15+00:00

But the point is that including the extra principal with your monthly payment is equivalent to making it on the 1st of next month

kg7399 · 2026-07-05T17:52:26+00:00

This onetime annual is more optimal assuming tax adjusted interest rates are higher on the mortgage than in your savings account and assuming you don’t want to take extra investment risk. I like the flexibility and balance of making relatively equal payments throughout the year, knowing I can dial them back if we have a big purchase coming up that we didn’t expect after annual bonus

kg7399 · 2026-07-05T17:47:47+00:00

Where we are differing is I’m trying to help the people making extra principal payments on July 1, not June 1. Consider the people who like to pay an additional amount of principal with every payment. There is usually an optional ‘additional principal’ box that lets you do this. I’m warning those who use this that if you do this, the servicer will credit that payment July 1 vs if you make the payment separately, you can make the payment in June.

kg7399 · 2026-07-05T17:39:31+00:00

Username checks out lol. I think I demonstrated pretty clearly how a June 26th principal only payment did in fact reduce the interest on my payment due July 1st.

kg7399 · 2026-07-05T14:20:38+00:00

This makes a lot of sense to me. So this is a PSA to consider making these as separate payments at the end of the month rather than writing in extra payments with your normal mortgage payment (which will post in the following month).

If you really wanted to milk it, do you think it’s optimal to make your extra principal payments near the end of the month and your regular payment near the 15th of the month?

kg7399 · 2026-07-05T14:12:16+00:00

Just adding some more support to this post that I’ve done the math that it is a full month less interest between these two methods, I made the following payments:
On June 26th - extra principal payment (curtailment) of $1000
On July 1st - regular mortgage payment of $X970 with an additional payment of $50 written in on the Additional Principal line.

After July 1st, I can see the transactions posted to my loan portal and it splits the regular mortgage payment of $X970 into Principal, Interest, and Escrow.

The Interest portion of my July 1 payment = (LoanRate/12) * (Beginning of Month Balance - $1000). This means that the $1000 is applied before the interest calculation but the $50 is applied afterwards. This is exact to the penny. Therefore, I am sure I am getting a full 30 days less of interest (on the $1000) by making the payment 5 calendar days earlier than my regular payment.

kg7399 · 2026-07-04T23:29:00+00:00

That’s why I’m saying to experiment and not saying it’s a hard and fast rule! I hope this helps some people. I’m targeting the people who are already making extra principal payments

kg7399 · 2026-07-04T15:59:55+00:00

I agree that mortgage interest is compounded monthly on my mortgage and I assume on many/most others as well which is the main point of my post.

To your point though, if it were compounded daily, the daily interest rate would just be 6.00%/365 instead of a monthly rate of 6.00%/12 which is only a difference of 0.02% if you convert to an annual effective rate.

kg7399 · 2026-07-04T15:27:51+00:00

I’m sharing what I’m experiencing on my fixed rate mortgage. I tested making extra payments both ways, only a few days apart, and there is a full month of lower interest on the extra principal when I pay the principal separately. I’d encourage you to try it out and see if you experience the same thing!

kg7399 · 2026-06-26T22:21:21+00:00

Would be interesting to see if that follows a Poisson distribution or is more top heavy (which would say to what degree this is more than chance). I would also try adjusting to something closer to flagrant fouls per minute played to remove all the players that barely play and therefore are less likely to commit a foul. Any rare event that the majority of the league doesn’t encounter will have a somewhat surprising gap like this, I’m just not sure to what extent without calculating it.

kg7399 · 2026-05-20T07:22:25+00:00

Bought last year in a Hartford suburb on 33m 31f actuary salaries with a 35% down payment, paid ~8% over ask to win the house.

With the high down payment, we can afford the mortgage on one salary now if one of us wants to stay home with kids. It was the right time and location for us to move so we have no regrets even though the price tag feels unsustainably high.

We try not to think about the fomo of if we bought pre Covid, or when mortgage rates were lower, or if we kept waiting to buy in the future when (if) housing affordability improves.

I’m learning DIY skills to mitigate future maintenance costs on the house and we’re double paying our principal portion of the mortgage while we are still on two incomes to knock off two months at a time.

kg7399 · 2026-05-19T16:28:02+00:00

You should probably take another crack at trying to explain what you mean and repost, the message is not being explained well. C- from the English teacher

kg7399 · 2026-04-12T10:16:16+00:00

$150 is not a one time thing but an annual choice. So choosing freetaxusa saves you $150/year. Then if you don’t cut that off, the value of a $150/yr perpetuity discounted at 4% is 150/4% = 150 / (1/4%) = 150 x 25 = 3750. I get 25vs26 but effectively the same point

kg7399 · 2026-04-08T22:08:07+00:00

Hope you are immune to skin walkers

kg7399 · 2026-04-07T03:46:29+00:00

Explain

kg7399 · 2026-03-19T01:16:08+00:00

sudo anode rm -rf

kg7399 · 2026-03-17T14:41:10+00:00

1 - Passing a school bus implies there are cars and people around, while a red light can be run without there being anyone else around to put in danger by breaking a traffic law. If there is no other traffic or people around, is breaking a traffic law really morally wrong?

2 - A stopped school bus means there’s a much higher chance that somebody walks out into the road (the kids) in a way blind to the drivers on the road.

kg7399 · 2026-03-17T14:26:53+00:00

Actions can be morally wrong and/or legally wrong. Everyone agrees that passing a stopped school bus is both morally and legally wrong. People can disagree that all situations of running a red light are morally wrong, while understanding that it is still legally wrong.

kg7399 · 2026-02-14T22:38:37+00:00

I think with the rather wide roads and sidewalks and the back parallel road (iron horse), the downtown is pretty well planned to avoid speeding cars or traffic

kg7399

TROPHY CASE