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I made an additional payment with my first mortgage payment but I noticed that although I designated the additional payment, say $10, as principal the remaining principal balance didn't go down by the exact amount. Based on the numbers the split was:

  • principal $8.56
  • interest $1.44

Is this normal? Did I misunderstand what the principal designation means?

EDIT: My servicer agreed that it was improperly classified and they fixed the error. Note to others - they can make mistakes.

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  • I would have thought they are referring to the accumulated interest which has become part of the principal, but 14.4% seems a lot.
    – Chris Degnen
    Commented Mar 13, 2023 at 20:53

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I made an additional payment with my first mortgage payment

I have found it is much clearer if the additional payment is done as either a separate check, or as a separate transfer. I make my additional principal payment as an additional transfer a few days after the required payment. I still have to specify that it is to reduce the principal. One advantage of the transfer is that I can automate it.

I would contact the mortgage payment processor, to make sure everbody is clear about the procedure and your intent.

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Read your loan documents or reach out to your lender.

Usually there's a minimum amount you need to meet before it's applied to the principal and/or you need to flag it explicitly.

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