Missing Monthly Payments
What if you had a $300,000 mortgage and you missed the 12th payment. Could you be certain that your lender was calculating your new amortization schedule accurately?
The MORTGAGE2 PRO amortization software easily accommodates that scenario.
You simply note the principal portion ($315.49) of the missed blended payment and type it in as a negative number in the prepayment column and then change the payment to zero in the payment column.
The program automatically adds the interest portion of missed blended payment to the balance. The principal portion of the blended payment must be paid back in addition to the interest. The number you type in the prepayment column is normally subtracted from the balance. If the prepayment column number is a negative number, it is added to the balance. Obviously the principal portion of the blended payment must be paid back in addition to the interest. This simple procedure can be repeated anywhere on the schedule for other missed payments in order to keep your amortization schedule intact and accurate so that there are no misunderstandings down the road as to the balance owing. What could be simpler?
It is also interesting to note, if this was the only missed payment and the mortgage was continued at the same interest rate to the end of the amortization period, the result of that missed payment is $10,000 plus in additional interest costs (subtracting the before and after SPREADSHEET Int. = values).
Some lenders charge an additional administration cost because of your missed payment (principal portion + administration cost) to the prepayment column. This is a touchy legal /ethical topic in both Canada and the USA because the lender is already being compensated. How much time and effort does it take for a lender to do this simple adjustment on a computer? Not too mention if the lender is adding this cost to the principal prepayment its multiplier effect because of compounding makes the additional administration cost for the missed payment much more severe than the initial amount!