How Many Months Ahead Can I Make My Mortgage Payment?

Homeowners often explore options for managing mortgage payments proactively, including making them ahead of schedule. Understanding how advanced payments work can provide flexibility and potentially impact the overall cost of a home loan.

Understanding How Mortgage Payments Are Applied

A typical mortgage payment consists of four primary components: principal, interest, property taxes, and homeowner’s insurance. The principal is the amount borrowed to purchase the home, while interest represents the cost of borrowing that money from the lender. Property taxes are assessments collected by local governments, and homeowner’s insurance provides financial protection against property damage.

When a monthly mortgage payment is made, a significant portion is first applied to the accrued interest for that period. The remaining amount then reduces the outstanding principal balance. In the early stages of a mortgage, a larger share of each payment goes towards interest, with a smaller portion reducing the principal. Over the loan’s term, this allocation shifts, and a greater part of the payment begins to reduce the principal balance.

Many mortgages also include an escrow account, which is a separate account managed by the lender. Funds for property taxes and homeowner’s insurance are collected as part of the monthly payment and held in this escrow account. The lender then pays these bills on the homeowner’s behalf when they are due. This helps homeowners budget for these large, infrequent expenses.

Distinguish between applying extra funds directly to the principal balance and making a full future payment in advance. An extra payment specifically designated for principal reduction directly lowers the loan balance, which can accelerate the loan payoff and reduce the total interest paid over the life of the loan. Conversely, making a full future payment in advance typically means advancing the next due date, without necessarily accelerating the principal reduction in the same way.

Lender Policies on Advanced Payments

The ability to make mortgage payments several months in advance, and how those payments are processed, varies significantly among lenders. Some lenders might only allow one month’s advance payment, while others could accept several.

Lenders process advanced payments in two ways. One method involves “advancing the due date,” meaning the next payment is not due until a later month. The other common approach is to hold the payment as a “credit balance” without immediately advancing the due date, applying it to subsequent payments as they become due. If the payment is held as a credit balance, interest continues to accrue on the full principal amount, which means there may not be interest savings unless the extra payment is specifically applied to principal.

To determine their specific lender’s policy, borrowers should consult their mortgage statement, which often contains details about payment application. Logging into an online account portal is another effective way to find information, as many lenders provide options for managing payments there. Reviewing the original loan agreement can also provide clarity on prepayment terms.

If these resources do not provide sufficient information, directly contacting customer service is advisable. When speaking with a representative, specific questions to ask include: “Do you allow payments to be made ahead of schedule?” “If so, for how many months ahead can I make a payment?” “Will this payment advance my due date, or will it create a credit balance on your account?” Understanding these distinctions helps ensure the payment is applied as intended.

Making Advanced Mortgage Payments

Once a borrower understands their lender’s policy on advanced payments, the next step involves the practical methods for submitting these funds. Common options for making mortgage payments include online portals, phone payments, and mailing a check.

When using an online payment portal, there is often a specific section for making extra payments. Borrowers should look for options such as “apply to next month’s payment,” “advance due date,” or “apply as principal only.” Selecting the appropriate option ensures the payment is directed as intended. Some online systems may even allow for setting up automatic recurring additional principal payments.

For phone payments, borrowers should clearly state their intention to the customer service representative. It is important to explicitly mention whether the payment is meant to cover a future month’s obligation or to be applied directly to the principal balance. When mailing a check, including a written note with clear instructions, such as “apply to next payment due on [date]” or “apply to principal only,” helps prevent misapplication of funds. Obtain confirmation of the payment and its intended application.

Tracking Your Mortgage Account After Prepayment

After making an advanced mortgage payment, borrowers should verify that the funds were applied correctly. This can be done by regularly reviewing mortgage statements or checking the online account portal. The account’s “next due date” is a key indicator to observe.

If the lender’s policy allows for advancing the due date, the statement should reflect a new, later due date for the next payment. For example, if a payment for October is made in September, the next statement might show November as the next payment due month. Conversely, if the payment is held as a credit balance, the original due date may remain unchanged, but the account will show an excess payment or credit.

The principal balance on the statement should also be reviewed. While an advanced payment primarily affects the due date, any portion specifically designated for principal reduction will be reflected in a lower outstanding loan balance. Checking these details ensures the payment was processed as instructed. If any discrepancies are noted, contact the lender for clarification and correction.