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From: stevev@tekchips.UUCP (Steve Vegdahl)
Newsgroups: net.invest
Subject: Re: The 3% rule
Message-ID: <72@tekchips.UUCP>
Date: Tue, 18-Feb-86 16:02:01 EST
Article-I.D.: tekchips.72
Posted: Tue Feb 18 16:02:01 1986
Date-Received: Wed, 19-Feb-86 23:49:18 EST
References: <1646@wanginst.UUCP> <4948@alice.uUCp> <184@milo.UUCP>
Organization: Tektronix, Beaverton OR
Lines: 38

> >> One fact to consider is that there will be a month in which you make
> >> NO payment, as there was when you first took out your mortgage.  That is
> >> effectively money in your pocket.
> 
> >
> >No it isn't, unless you want to think of it as "borrowed money in your pocket."
> >For instance, we just refinanced our house.  The old mortgage had
> >payments due on the first of each month.  The new one has payments
> >due on the fourth (the anniversary date of the loan).  Thus we will
> >make payments on Jan 1, Feb 1, March 4, April 4, and so on.
> 
> I'm confused. I thought mortgage payments were for the previous month.  So Jan 1
> would cover December, Feb 1 would cover January, and so on.  If you
> refinanced your house on say, Feb 15, at that time you would pay 
> interest for the rest of the month (or until March 4 in your case).  Then
> the next payment wouldn't be due until April 4, and it would cover interest
> from March 4 to April 4.  On April 4 an all too small amount would be deducted
> from your principal, and interest would begin accruing on that new amount.
> That's the way it works around here anyway.  Who floated your
> mortgage, the Mafia?  If not, recheck your paperwork; you may be in
> for a pleasant surprise.

When we refinanced our mortgage this past year, both the exisiting and
new mortgages had due dates on the first of the month.  There was indeed
a month in which we had no mortgage payment.  HOWEVER, the interest for
that month was paid as part of closing.  The closing took place on the
12th of the month.  There was a line item on statement for interest from
the 1st through the 12th of the month to be paid to the holders of the
existing mortgage.  Furthermore, there was a line item that included a
payment to the new mortgage holders for interest from the 12th of the month
through the 31st.  The net effect was that we paid for a full month's
interest at closing; I believe that we actually paid for interest to both
parties for the closing date.  Thus, no free lunch.

		Steve Vegdahl
		Computer Research Lab.
		Tektronix, Inc.
		Beaverton, Oregon